MNI: China Blasts U.S. Aluminum Probe; 1st Step In Trade War?

--Beijing Says It Will Protect Its Firms Against Price/Subsidy Inquiry

By William Bi

     BEIJING (MNI) - Could China and the United States -- the world's two

largest economies -- be headed for a near-term trade war? 

     The U.S. Commerce Department announced Tuesday that it would initiate on

its own accord an investigation into the pricing and subsidy support for imports

of aluminum sheeting made in China. 

     The Commerce Department announcement came only three weeks after U.S.

President Donald Trump met Chinese President Xi Jinping in Beijing, and a day

after North Korea tested another ballistic missile. After their first meeting in

Florida in March, Trump promised that China would get preferential trade

treatment if it helped the U.S. solve the North Korean crisis. 

     China reacted angrily to the Commerce Department move. 

     China will take "necessary measures" to safeguard the rights and interests

of Chinese enterprises, the Ministry of Commerce said Wednesday. China also

expressed its "strong dissatisfaction" over the move by the U.S., Wang Hejun,

director of the Bureau of Trade Relief Investigation, said in a statement on the

ministry's website.

     The U.S. anti-dumping and anti-subsidy charges were not based on input from

the domestic industry but initiated by the Commerce Department on its own,

something it hasn't done in 25 years, Wang noted. Imposing barriers on the

aluminum products trade will harm the interests of both countries, as the two

sides' aluminum industries are complementary, Wang argued.

     On Tuesday, the U.S. Commerce Department self-initiated an anti-dumping

investigation against Chinese imports of sheet aluminum under the Tariff Act of

1930. It was the first time since 1985 that the Commerce Department had taken up

an anti-dumping investigation without the affected industry requesting that it

do so. 

     In addition to investigating whether Chinese producers were dumping

aluminum sheeting in the U.S. at unfair prices, the Commerce Department

initiated a parallel investigation into whether Chinese producers are

benefitting from illegal subsidies from their government. 

     Analysts have warned that such unilateral trade action could start a

tit-for-tat trade war. 

     "President Trump made it clear from day one that unfair trade practices

will not be tolerated under this administration, and today we take one more step

in fulfilling that promise," U.S. Commerce Secretary Wilbur Ross said in a

statement announcing the trade actions. "We are self-initiating the first trade

case in over a quarter century, showing once again that we stand in constant

vigilance in support of free, fair, and reciprocal trade."

     The Commerce Department statement said it had started the investigations

"based on information indicating that the United States price of common alloy

sheet from China may be less than the normal value of such or similar

merchandise and that imports of common alloy sheet from China may be benefitting

from countervailable subsidies."

     "The Department also has evidence that imports of common alloy sheet from

China may be materially injuring, or threatening material injury to, the

domestic industry producing common alloy sheet in the United States," it said. 

--MNI BEIJING Bureau; +1 202-371-2121; email: john.carter@mni-news.com

--MNI Beijing Bureau; +86 (10) 8532-5998; email: vince.morkri@marketnews.com

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