The Department of Commerce is expected to launch a formal investigation into whether Chinese steel companies are shipping steel through Vietnam to avoid U.S. import tariffs.
The decision to investigate, follows a complaint in September from U.S. steelmakers, and is an escalation of U.S. efforts to stop a glut of China-made metal imports from flooding U.S. markets. The inquiry could result in new import tariffs on steel imported from China via Vietnam, under rules designed to prevent such a tariff-evading practice, which is known as circumvention.
U.S. steel producers alleged in their complaint that Chinese steelmakers have shipped metal to Vietnam, made enough changes to it that they could then classify it as Vietnamese and then exported it to the U.S. under the lower tariffs charged on Vietnamese steel.
At the heart of the issue is whether the changes — for example adding zinc to make it corrosion-resistant — fundamentally alter the steel enough to make it essentially a brand new product that is “Made in Vietnam.”