When California needed a new Bay Bridge, they decide to buy it from China. China was the cheaper option, primarily because of lower cost steel produced in the sort of conditions that the Golden State’s NIMBYs, or “Not In My Back Yard,” prefer not to see. China’s blatant subsidies, lax labor standards, and eagerness to burn high-sulfur coal made for an irresistible deal. And so, thousands of American steel jobs were shipped to Shanghai. But the steel for the bridge was plagued with structural problems, and the overall project eventually ran billions of dollars over budget.
It’s boondoggles like the Bay Bridge that likely helped prompt President Trump’s recent decision to impose tariffs on steel and aluminum imports. There has been fiery criticism of the tariffs, to be sure. But it’s simply a necessary step to salvage a key U.S. industry. And there are important national security concerns that make the president’s decision doubly important.
Imposing tariffs on a vital industrial commodity is a weighty decision. But the U.S. did not arrive at this point by accident or simply through random market forces. The current situation is the result of China’s long-term strategic policies, which pose important economic, military, and environmental implications. Chairman Mao Zedong once identified steel as a critical piece of the industrial supply chain for a modern economy. And while his Great Leap Forward was a disaster of execution, China’s Communist Party has been persistent in the intervening years.
In the early 2000s, Beijing began to aggressively subsidize government-owned steel production at an enormous cost to the Chinese people. The BBC reported that an average of 13 Chinese coal miners died each day in 2007. The air in Beijing has become notoriously unbreathable. Industrial smog now kills more than a million people in China each year. A brown cloud has settled over East Asia; according to researchers at the University of California, it drifts across the Pacific Ocean, contributing to deadly particulate pollution in California.
Beijing has willingly sacrificed lives for industrial dominance, and all in pursuit of a simple goal: eradicating the primary production of steel and aluminum in the U.S. It’s a strategy China has also followed for toys, apparel, electronics, and computers — all formerly important sources of California employment. China’s dominance of the global steel and aluminum market is key to supporting other government-owned enterprises in their long-planned assaults on high-tech American industries. With a near-monopoly position in metals, China can manipulate dependent industries, extracting further capital and technology concessions from America’s automobile and aircraft industries.
In 2010, China forcefully demonstrated this technique to Japan by leveraging its monopoly over rare earth elements. A Chinese vessel had rammed a Japanese coast guard ship. But Tokyo quickly released the captain of the Chinese vessel after Beijing cut off rare-earth supplies to Japanese electronics and auto firms.
Some naive writers have noted that the U.S. doesn’t actually import much steel directly from China. This is true. But China doesn’t need to sell their ill-gotten steel directly to the U.S. to undermine American capacity. With over half of the world’s productive capacity for a key commodity, they have simply become the global price setters. As long as China’s dictators keep metals prices below the point where U.S. firms can afford to reinvest in themselves, America’s industrial base and military capacity will wither and die without a shot being fired. It is this ability of China to manipulate global prices and trans-ship their production through friendlier nations that explains why Trump’s tariffs wisely target global steel imports and not just those directly from China.
Outside of steel production, there are also military issues to contemplate. China’s aggressive naval buildup, particularly in submarines and ship-to-ship missiles, has been designed to threaten America’s supply chain producers, like South Korea, Taiwan, and Japan. The subtlest implication of a threat from Beijing against Asian ports and merchant fleets could cripple America’s military production.
Overall, China’s aggressive steps to erode America’s steelmaking industry have long portended troubling repercussions for national security. It’s simply not a tolerable or safe position for the U.S. Trump was correct to take action on steel and aluminum imports, and anyone concerned about the global environment, American jobs, or national security should support his decision.
Dr. Greg Autry is an assistant clinical professor at the Marshall School of Business, University of Southern California. He is also co-author (with Peter Navarro) of Death by China.
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