China Churns Out Half The World's Steel, And Other Steelmakers Feel Pinched U.S. steel producers have seen their market share erode since China began ramping up production. President Trump sees tariffs on imports as a way to protect domestic producers.
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China Churns Out Half The World's Steel, And Other Steelmakers Feel Pinched

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China Churns Out Half The World's Steel, And Other Steelmakers Feel Pinched

China Churns Out Half The World's Steel, And Other Steelmakers Feel Pinched

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STEVE INSKEEP, HOST:

President Trump's push for tariffs on steel and aluminum imports is driven in part by competition from China. The United States still produces most of its own steel, we should be clear. But the industry has faced pressure from cheap Chinese imports. As NPR's Jim Zarroli reports, China's long-term increase in steel production has driven down steel prices all over the world.

JIM ZARROLI, BYLINE: Steel has long occupied a special place in the way countries see themselves. In this industry film from the '50s, steel was portrayed as a source of national pride, a symbol of a country's industrial might.

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UNIDENTIFIED MAN: Many, many things are vital to our living and to our standard of living. Only one - but a big one - is steel. We could do without it, but not as well because it does a lot of things for us. Try naming them sometime...

ZARROLI: When President Trump announced tariffs last week, he said manufacturing steel is essential to a nation's defense.

(SOUNDBITE OF ARCHIVED RECORDING)

PRESIDENT DONALD TRUMP: When it comes to a time when our country can't make aluminum and steel - and somebody's said it before, and I will tell you - you almost don't have much of a country.

ZARROLI: This veneration of steel happens all over the world, says economist Linda Lim of the University of Michigan. Lim says every emerging industrial power wants to make steel. The problem is no one wants to buy it. And Lim says this is especially true in China.

LINDA LIM: Way back in the '50s and '60s, it was such a fetish of theirs that they had what were called backyard furnaces. People melted down their silverware in order to produce steel for the national good.

ZARROLI: Lim says China's preoccupation with steel wouldn't be an issue except for the fact that China is so very big. Over the past two decades, China has greatly increased its steel production so that it now dominates the industry, says Eswar Prasad of the Brookings Institution.

ESWAR PRASAD: China now accounts for about half of the world's production of steel. China now produces in one year as much steel as the entire world used to produce back in 2000.

ZARROLI: Prasad says China uses most of the steel it produces itself for bridges and buildings and autos. But it still has a lot left over.

PRASAD: It needs to export about 10-15 percent of its steel. And given how much steel China produces these days, that tends to have a pretty big effect on world steel prices.

ZARROLI: What it's done, he says, is keep prices low, and that has angered other steel-exporting countries. Washington imposes duties on Chinese steel, which is why the U.S. actually imports relatively little of the product from China today. Still, China's overproduction has hurt U.S. steelmakers. The U.S. share of the global steel market is only 5 percent today. Linda Lim says countries have held talks aimed at scaling back steel manufacturing, but it's been hard to come to an agreement.

LIM: Everybody agrees global excess capacity must be cut. But nobody can agree on who's to be cut.

ZARROLI: Like a lot of economists, Lim doesn't think Trump's tariffs are a good idea. They will drive up prices, which will hurt other industries that use steel. She says because steelmaking is so automated today, tariffs are unlikely to produce many jobs. And even if they do, it won't necessarily be in the Rust Belt towns where the jobs used to be. But, she says, that's not really the point of the tariffs.

LIM: That's why I think it's not really about jobs, and it may not even be really about politics. It's about something deeper.

ZARROLI: What it is, she says, is an effort to shore up an industry still widely seen as essential to a country's identity and demonstrate that the U.S. remains an industrial power. Jim Zarroli, NPR News.

(SOUNDBITE OF FOUR TET'S "TWO THOUSAND AND SEVENTEEN")

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