Biden vows to shield US steel industry by blocking Japanese merger and seeking new Chinese tariffs

PITTSBURGH — President Joe Biden suggested to cheering, unionized steelworkers on Wednesday that his administration would thwart the acquisition of U.S. Steel by a Japanese company, and he called for a tripling of tariffs on Chinese steel, seeking to use trade policy to win over working-class votes in the battleground state of Pennsylvania.

The Democratic president’s pitch comes as Donald Trump, his likely Republican opponent, tries to chart a path back to the White House with tough-on-China rhetoric and steep tariff proposals of his own.

During a visit to the Pittsburgh headquarters of United Steelworkers, Biden said U.S. Steel “has been an iconic American company for more than a century and it should remain totally American.”

Administration officials are reviewing the proposed acquisition of U.S. Steel by Japan’s Nippon Steel, and Biden said last month he would oppose the deal, saying it was “vital for it to remain an American steel company that is domestically owned and operated.”

But in front of a union audience, he went much further in pledging he may block it.

“American-owned, American-operated by American union steelworkers — the best in the world — and that’s going to happen, I promise you,” he said.

In another step that his administration argues can protect domestic steelworkers, Biden also announced that he will push for higher tariffs on Chinese steel and aluminum, aiming to insulate American producers from a flood of cheap imports.

Biden's push on steel reflects the intersection of international trade policy with his reelection effort, although the White House insisted they were more about shielding American manufacturing from unfair trade practices overseas than firing up a union audience.

The current tariff rate is 7.5% for both steel and aluminum but could climb to 25% under Biden's proposal. The president said he was asking his trade representative to seek the increase, and separate tariffs of 10% on aluminum and 25% on steel would also remain in place.

The U.S. imported roughly $6.1 billion in steel products in the 12 months ending in February 2023, but just 3% of those imports came from China, according to Census Bureau figures. Citing existing trade barriers, the American Iron and Steel Institute said China last year accounted for even less — just 2.1% of U.S. steel imports — making it America’s seventh-biggest source of foreign steel.

However, a senior administration official said there are concerns about China ramping up exports, making the higher tariff levels necessary as a preventative measure.

Liu Pengyu, a spokesman for the Chinese Embassy in Washington, said the “U.S. is making the same mistake again and again” by seeking increased tariffs. In a statement, he also dismissed levies already in place as “the embodiment of unilateralism and protectionism of the U.S.”

Biden insisted that getting tougher on China was sound policy, including when it comes to preventing the exportation of advanced technologies that could “undermine our national security.”

He said he delivered a similar message to Chinese President Xi Jinping during previous conversations, telling him, “You’ll use them for all the wrong reasons, so you’re not going to get those advanced computer chips.”

Biden criticized Trump for failing to take such steps, saying that “for all his tough talk on China, it never occurred to my predecessor to do any of that.”

The administration also promised to pursue investigations against countries and importers that try to saturate existing markets with Chinese steel, and said it was working with Mexico to ensure that Chinese companies cannot circumvent the tariffs by shipping steel there for subsequent export to the United States.

“The president understands we must invest in American manufacturing. But we also have to protect those investments and those workers from unfair exports associated with China’s industrial overcapacity,” said White House national economic adviser Lael Brainard.

U.S. Trade Representative Katherine Tai also announced Wednesday that her office, acting on a petition from five national labor unions, was investigating China for “targeting the maritime, logistics and shipbuilding sectors for dominance.”

China's Commerce Ministry responded hours later that the “U.S. petition is full of false accusations.”

It ”misinterprets normal trade and investment activities as damaging to U.S. national security and corporate interests," the ministry said in a statement. “And blames China for the U.S.'s own industrial issues, lacking factual basis and running counter to common sense in economics.”

China produces about half of the world’s steel and is making far more than its domestic market needs. It sells steel on the world market for less than half what U.S.-produced steel costs, senior Biden administration officials said.

The first step to the higher tariffs is the completion of a review of Chinese trade practices. Once Biden gives the official authorization, there will be a public notice and a comment period that could take weeks.

Biden is on a three-day Pennsylvania swing that began in his childhood hometown of Scranton on Tuesday and will include a visit to Philadelphia on Thursday. After ignoring the first two days of Trump’s hush money trial in New York, Biden made a veiled reference to it on Wednesday, joking that his predecessor is “busy right now.”

Biden's announcement on steel tariffs was cheered by U.S. steelmakers. Kevin Dempsey, president of the American Iron and Steel Institute, accused China of disrupting “world markets both by subsidizing the production of steel and other products, and by dumping those products in the U.S. and other markets.”

To coincide with the announcement, Biden’s campaign released a 60-second ad that will air on Pennsylvania television for the next five days. It features a steelworker, who is also a small-town mayor, praising the president’s economic policies.

Higher tariffs can carry major economic risks. Steel and aluminum could become more expensive, possibly increasing the costs of cars, construction materials and other key goods for U.S. consumers. Also, inflation has already been a drag on Biden's political fortunes, and his turn toward protectionism echoes Trump's playbook.

The former president, who has said he would never allow the acquisition of U.S. Steel by a foreign company to go through, imposed broader tariffs on Chinese goods during his administration and has threatened to increase levies on Chinese goods unless they trade on his preferred terms as he campaigns for another term.

An outside analysis by the consultancy Oxford Economics has suggested that putting in place the tariffs Trump has proposed could hurt the overall U.S. economy.