Under the Trump administration the U.S. launched a trade war against China. It started with various tariffs on Chinese products. The Biden administration topped that by using the flimsy pretext of alleged 'forced labor' in Xinjiang to make it more difficult to import goods from China. This contradicted Biden's plan for climate change as nearly all solar panels are made from raw materials found in Xinjiang. The trade war continued with the chip war against China's technological progress.
The tariffs and restriction run counter to the World Trade Agreement which the U.S. is increasingly willing to ignore.
The administration has now developed a new scheme that will use the pretext of climate change to wage an economic war against China's and other countries' steel and aluminum industries. To be more effective it is trying to get the European Union on board:
The Biden administration on Wednesday sent a proposal to the European Union suggesting the creation of an international consortium that would promote trade in metals produced with less carbon emissions, while imposing tariffs on steel and aluminum from China and elsewhere, according to a copy viewed by The New York Times.
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The proposed group, known as the Global Arrangement on Sustainable Steel and Aluminum, would wield the power of American and European markets to try to bolster domestic industries in a way that also mitigated climate change. To do so, member countries would jointly impose a series of tariffs against metals produced in environmentally harmful ways.
This is clearly not a policy to mitigate climate change but to limit free trade to the advantage of domestic industries.
The target of this effort is obviously China:
The levies would be aimed at China and other countries that did not join the group. Countries that did join would enjoy more favorable trade terms among themselves, especially for steel and aluminum produced more cleanly.
To join the arrangement, countries would have to ensure that their steel and aluminum industries met certain emissions standards, according to the document. Governments would also have to commit to not overproduce steel and aluminum, which has pushed down global metal prices, and to limit activity by state-owned enterprises, which are often used to funnel subsidies to foreign metal makers. While the concept paper does not mention China, these requirements appear likely to bar it from becoming a member.
The scheme would give advantage to steelmakers who melt scrap in electric arc furnaces to make new steel. (Just don't ask how that electricity was made …) But the global population is still growing and will require more steel to be made. With the help of coal it is melted from ore in blast furnaces in a relatively dirty process. The raw iron is then converted into steel using oxýgen converters which are likewise not climate friendly.
Most of the basic steel creation is now done in China, India and other less rich countries while steel making in the west is now often a mere recycling process:
The U.S. steel industry is already among the cleanest in the world, as a result of the country’s stronger environmental standards and a focus on recycling scrap metal. The agreement is designed to capitalize on those advantages and help American companies withstand competition from heavily subsidized steel and aluminum manufacturers in China and elsewhere.
But the United States is also home to many industries that buy foreign steel and aluminum to make into other products. They could object that the move would increase their costs.
Those industries will only protest if they cannot put the price increase onto consumers of their products. They will probably demand more tariffs on imports to hinder their foreign competition.
The really dumb part of the scheme is that there is no way in which the U.S. or Europe could measure or even estimate how environmentally friendly or unfriendly foreign steel production actually is:
If the United States and Europe move forward with the structure, there is likely to be an intense fight over where tariffs are set and how carbon emissions are measured.
The development of a method for figuring out the amount of greenhouse gas emissions in the production of any particular product is still in the early stages, and much more data would need to be gathered at the level of specific products and companies, people familiar with the plans said.
The policy has little to do with the reduction of greenhouse gases and is all about limiting trade to the benefit of domestic industries. Consumers will suffer from it due to higher prices. One could summarize it: as rich countries shall punish poor countries for not being rich.
I hope that the Eurocrats will not agree to this scheme as that could give it some credibility. The U.S. would certainly have no qualms to eventually use similar schemes against Europe's industries.
China, India and other BRICS countries will of course oppose the scheme and would likely retaliate against U.S. exports should it ever be implemented.
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For a bit historic background on China and trade policies I highly recommend this talk with Brian Berletic and Carl Zha: China's "Century of Humiliation" & US-Chinese Tensions Today (vid)