Difficulties in exporting steel to the United States

In the long term, imposing high taxes will cause great disadvantages for steel exports to the United States. Picture: Nguyen Thanh.

There are many disadvantages

On May 21, the US Department of Commerce announced the imposition of a "strong" import tax on steel products from Vietnam that are supposedly originating in China. Specifically, US Customs will collect anti-dumping duties of 199.76% and anti-subsidy tax of 256.44% on cold-rolled steel produced in Vietnam by substrate steel of Chinese origin. The US Department of Commerce has also announced that it would impose similar anti-dumping and anti-subsidy duties on corrosion-resistant steel and cold rolled steel from Vietnam originating from hot rolled coil (hot-rolled steel) produced by China. In particular, stainless steel from Vietnam is subject to anti-dumping duty of 199.43% and anti-subsidy tax of 39.05%.

On March 8, US’s President Donald Trump issued a decision to impose import restrictions on steel and aluminum under Section 232 of the Trade Expansion Act 1962 in the form of an increase in import taxes. Accordingly, some steel and aluminum products imported into the country will be subject to 25% tax on steel and 10% on aluminum. New tariffs announced on May 21 will be added to the 25 percent tariff on most imports of steel products into the United States, according to President Donald Trump's earlier decision.

Talking to Customs newspaper’s reporters, Mr Nguyen Van Sau, vice president cum general secretary of Vietnam Steel Association (VSA) said: Until now, Vietnam steel exports to many markets such as ASEAN, EU ... In these markets, steel has been subject to trade remedies. As a result, Vietnam's steel industry has faced up to 25 cases of trade remedies from the import market, in which it has been reported that the cases originated from Australia and Indonesia, Malaysia, Thailand, recently USA and EU. The lawsuit brought tax, steel exports to Vietnam in the form of market price increases, reducing competitiveness. With the US’s market alone, in 2017, the amount of steel export from Vietnam to the United States is just over 0.5 million tons. This is a very small part of Vietnam's total export volume of 4.7 million tons, so the imposition of the US tax does not have much impact on domestic production. However, in the coming months, exporting steel to markets such as the United States, EU will face more inevitable difficulties. Remarkably, in the long term, as the steel industry develops, the United States' establishment of high tariff barriers will be detrimental.

Studying the exemption condition carefully

Around the tariff barriers that the United States applies to Vietnamese steel, Mr Chu Thang Trung, deputy director of the Department of Trade Remedies (Ministry of Industry and Trade) said that the US Department of Commerce gives the exemptions for steel products made in Vietnam to export to the United States provided that the source of raw materials are not imported from a third country and use raw materials in the country, including the procedures required for export enterprises’ proof. "I recommend businesses to meet the exemption conditions set by the US Department of Commerce," Mr Trung said.

Mr. Nguyen Van Sau added that competition in the steel industry includes many aspects such as: quality, price, service, warranty ... So in the future, to increase competitiveness, reduce the risks in the market, the most basic solution is that steel enterprises must continuously improve technology, improve management ability, production ... Enterprises also have to improve their understanding of international trade, regulations of the World Trade Organization (WTO), the laws of countries to avoid commercial risks. In addition, businesses must have a reasonable market allocation, not only focus on a single market, avoid sudden increases in production that create excuses for countries to erect trade barriers.

"Vietnam Steel Association wants to receive more and more support from state management agencies, especially direct units such as the Ministry of Industry and Trade. Specifically, the commercial counseling system in the country can help the steel enterprises market information as well as the rules and regulations of the market. On the basis of business, enterprises can better understand the market as well as legal barriers to avoid commercial litigation," Mr Sua said.