The US Commerce Department just gave us two examples of their new aggressiveness in protecting American businesses from foreign competition that might be unfair. First, it just self-initiated a trade case against the Chinese aluminum producers that will not make its way through the system much like the steel cases did starting 18 months ago. This speeds up the process because the companies affected don’t have to wait to show injury before filing and indicates that the department is already sympathetic to their fate. The second instance was the ruling in the Vietnam circumvention of tariff case. This is where US steel mills charged that the Vietnam mills were selling cold-rolled and galvanized steel products made from Chinese hot rolled steel, and were shipping it to the US as Vietnamese product and free of the large Chinese tariffs that would normally apply. The Vietnam defense was that converting hot rolled steel into cold rolled steel and into galvanized steel constituted a material transformation of the product, and thus the country of origin becomes Vietnam, not Chins were the steel was originally produced. Not so says Commerce, and is applying the 200%+ Chinese tariffs to Vietnam. That’s pretty big news and positive for steel pricing short-term. But one must wonder where that definitional change in transformation will take us. Can one now expect say a lawn mower made in say Thailand from steel that was made in China, transformed somewhere else, and fashioned into a lawn mower in Thailand to be burdened with 200%+ tariffs due to the origin of the steel?
MAZZAFERRO RESEARCH 