China gets a warning with US-U.K. tariff deal, Raimondo says

A key clause in the U.S.-U.K. agreement to ease tariffs on British steel and aluminum sends a warning to China about its policy of subsidizing producers, President Joe Biden’s commerce chief said.

The agreement announced Tuesday, which will allow steel up to a certain level to be imported into the U.S. duty-free, includes a provision that any British steel company owned by a Chinese entity must undergo an audit of financial records to assess influence from China’s government and share the results with the U.S.

The measure is designed to monitor for unfair subsidies, prevent market-distorting practices and ensure a level playing field for American workers, Commerce Secretary Gina Raimondo said in an interview on Wednesday.

“This deal is a very strong signal to China that the U.S. and U.K. are committed to pushing back against China’s anti-competitive practices,” Raimondo said.

China is the world’s largest consumer and producer of steel and aluminum, accounting for more than half of the entire global markets.

The Trump administration imposed a 25% steel tariff, along with a 10% duty on aluminum imports, in March 2018 on a range of nations, using a national-security provision in a 1962 trade law. The European Union and the U.S. in October brokered a deal for Washington to ease those tariffs, but the tariffs remained on the U.K. due to the nation’s exit from the bloc.

The U.S. also reached a similar accord with Japan in February.

The deal with the U.K. also provides an important lift for American companies that use steel and aluminum as inputs at a time of high inflation, Raimondo said.

Firms “consume steel and aluminum, prices are high, and this is a good thing for the supply chain,” Raimondo said.