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Iron Range gladdened by reports Biden won’t drop tariffs on Chinese steel

In 2018, the state’s mining sector contributed more than $2 billion to the Arrowhead region’s economy, and that taconite production – a type of iron ore mined in the state – grew after tariffs were imposed on Chinese steel.

The Xinyuan Steel plant in Anyang, Henan province, China.
The Xinyuan Steel plant in Anyang, Henan province, China.
REUTERS/Thomas Peter

WASHINGTON – Here’s one thing Republican Rep. Pete Stauber and Democratic Sen. Tina Smith can agree on: President Joe Biden should not drop Trump administration-imposed tariffs on Chinese steel.

To combat inflation Biden may drop some of the tariffs imposed on about $350 billion worth of goods the United States imports from China. The president is expected to make his decision on tariffs soon; in the coming days or weeks.

But to the relief of Minnesota’s iron ore industry, its workers and state lawmakers, Biden is expected to keep Trump-era tariffs on imported steel, as well as aluminum. Keeping those tariffs in place will prevent the price of domestic steel – and its key component iron ore – from dropping because it keeps the price of Chinese-made steel from being competitive.

The imposition of 25% tariffs on Chinese steel is one Trump policy Smith, supports.

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“For too long, China has cheated on its international trade commitments on steel production, put Iron Rangers out of work, and threatened our national security,” Smith said. “Steel tariffs are a critical tool to counteract China’s unfair trade practices.  I continue to believe that strong tariffs are needed to protect American workers and our domestic steel industry.”

A university of Minnesota study determined that the state’s mining sector grew by 37% between 2009 and 2018, adding 1,138 jobs. It also said that in 2018, the mining sector contributed more than $2 billion to the Arrowhead region’s economy, and that taconite production – a type of iron ore mined in the state – grew after tariffs were imposed on Chinese steel.

Trump imposed tariffs on Chinese exports after an investigation concluded China stole intellectual property from American companies and forced them to transfer technology.

Yet the tariffs have appeared to do little to persuade China to change its ways. And the Chinese reacted by imposing duties on a wide range of U.S. exports, including wheat, wine, pork and other American products.

Now the Biden administration say the tariffs imposed on Chinese-made consumer goods fuel inflation – forcing consumers to pay more for bicycles, appliances and other popular made-in-China products. But a strong pushback from unions and industries to keep some of the tariffs has prompted the Biden administration to adopt a cautious, limited approach – and to reportedly plan to keep tariffs on aluminum and steel.

Stauber, who represents Minnesota’s 8th District, recently wrote to Biden saying he was “extremely concerned” that his administration would consider “further repealing tariffs on China including, specifically, tariffs on steel and aluminum imports as well as on steel-intensive imported products.”

“Simply put, your decision to end these tariffs would have a devastating, direct, and immediate impact on these very families and workers in northern Minnesota and throughout steel country,” wrote Stauber.

Biden officials, including Treasury Secretary Janet Yellen and Commerce Secretary Gina Raimondo have pushed for broader tariff relief. Some have made a political argument, saying it’s important for Biden to signal to voters ahead of the midterms that he’s working to counteract rising prices.

And certain American industries have lobbied for an end to Chinese tariffs, too. For example, American soft drink and beer manufacturers have pressed the administration to eliminate tariffs on imported aluminum.

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However, those urging a broader end to tariffs on Chinese products seemed to be outmatched by the nation’s labor unions, including the United Steelworkers, who demand the tariffs on steel and aluminum stay in place. Biden values his relationship with organized labor and union leaders and has taken pains not to cross them.

Monica Haynes, director of the Bureau of Business and Economic Research at the University of Minnesota-Duluth, said the state mines about 75 percent of the iron ore produced in the nation. She said a decision to keep tariffs on imported Chinese steel will help that state industry.

“Obviously anything that benefits the steel industry will benefit the iron ore industry,” Haynes said.

But the economist also said a narrow approach to lifting tariffs will do little to fight inflation.

“I can’t imagine these changes would have a lot of impact,” Haynes. And any impact on inflation might not be felt for months, she added.

Still, besides the Federal Reserve’s decision to raise interest rates to cool down the economy, removing tariffs from popular, imported consumer products from China is “one of the few levers the administration has in fighting inflation,” Haynes said.

And, besides reviewing the existing tariffs on Chinese goods and raw materials, the administration may impose new tariffs on China, which may have an adverse effect on inflation.

The Biden administration is expected to announce a new tariff investigation under Section 301 of the 1974 Trade Act that will target sectors of the Chinese economy that are heavily subsidized by the Chinese Communist Party. That investigation is expected to focus on high-tech sectors like semiconductors and batteries, which the Chinese government has been accused of unfairly subsidizing to the disadvantage of American companies.