WASHINGTON • China was mentioned only in broad terms when US President Donald Trump announced plans to impose tariffs on steel and aluminium imports. But the country was a major driver behind the action.
The world's largest steelmaker sends only a fraction of its output to the United States, but floods the global market with cheap products. That hurts American producers, though it makes steel cheaper for everyone who uses it.
Steel has long been a sore spot in trade between the US and China. Washington has levied more tariffs and countermeasures against Chinese steel than it has against steel from any other place.
Once a big exporter of steel into the US market, last year China ranked as only the 11th-largest supplier. US imports of Chinese steel have fallen 31 per cent since 2011.
American steelmakers argue that Chinese steel hurts them anyway. Faced with American tariffs, the argument goes, Chinese steel mills simply send their products elsewhere. That drives down global prices and pushes other countries to export cheap steel to the US.
Mr David Burritt, chief executive of US Steel, alluded to the idea when he referred to the steel trade issue as "the Whac-A-Mole game". But any global trade fight goes back to China.
Tonnes of steel the United States imported last year, of which only 2.9 per cent came from China.
Thanks to its rapid industrialisation over the past four decades, China now makes roughly as much steel as the rest of the world combined. While it consumes much of what it makes, China is also by far the world's largest exporter, although the amount it sells overseas has been on the decline.
In taking aim at China's steelmakers with broad tariffs, the US could hurt its trusted allies. Consider South Korea. China is the single biggest source of its imported steel. South Korea is also a major exporter to the US. In terms of raw volume, however, South Korea's exports to the US total about one-quarter of what it imports from China.
The US' trading partners have room to retaliate.
But some of the biggest steel exporters to the US are some of the biggest buyers of American products. A trade war is far from guaranteed.
China has put greater emphasis on exporting higher-valued products, like finished machinery and high-tech goods, rather than raw steel. Beijing may not want to endanger its markets in those products.
The US accounts for 14 per cent of China's total aluminium exports. Last month's exports fell 15 per cent from January.
China's steel product exports over January and February fell 27 per cent to 9.5 million tonnes from a year earlier. China accounted for only about 2.9 per cent of US steel imports, data compiled by Wood Mackenzie showed. The US imported a total 35.6 million tonnes last year.
But steel and aluminium may be only a first step. Administration officials have expressed concerns about China's growing ambitions in industries such as semiconductors, telecommunications equipment and other high-tech exports.
If Mr Trump goes after tech, the effects could eat into the Chinese economy. That could provoke Beijing to go much further.
Yet, just as the world girds itself for steel-lined trade wars, the cause of all this unhappiness is fast receding. China's aluminium exports grew more than 25 per cent in the first two months of this year, but steel exports fell by nearly a third.
Chinese steel production has peaked. Much more significantly for the global steel market, the country's exports have peaked as well.