This Big Trade Issue is Likely to Take Center Stage at the Upcoming G20 Summit

By Elizabeth Brotherton-Bunch
Jul 05 2017 |
German Chancellor Angela Merkel and President Trump are expected to clash at the G20 summit. | Wikimedia Commons

Hint: It also was a major focus at last year’s G20 summit.

Looks like the gang is getting back together!

The annual G20 summit is set to kickoff on Friday in Germany. It’s the first time that President Trump will be attending the yearly get-together of the world’s top economies, and the consensus is that he’s going it alone on nearly everything as he heads into the meeting.

Take it away, Aaron:


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In all seriousness, a lot is expected to be on this year’s G20 agenda, from North Korea to migration to the future of NATO to climate change. And German Chancellor Angela Merkel, who is hosting the summit, is expected to directly challenge Trump on a number of issues, including trade.

The centerpiece of that diplomatic discussion might just possibly center on steel. Here’s why.

Trump and Merkel have been at odds on trade ever since he took office, and the president doubled-down on his anti-trade tendencies in a tweet on Wednesday morning just before he left for Europe. The tweet might be a typical Trump talking point, but the most substantive issue happening in the trade debate right now is the debate over steel – specially, the ongoing Commerce Department Section 232 investigation into whether steel imports pose a threat to national security.

We’ve written about the Section 232 case quite a bit here at the Alliance for American Manufacturing – here’s a detailed look if you need it. To sum up: China’s industrial overcapacity is flooding the global market with too much steel, which has led to plant closures and tens of thousands of layoffs here in the United States. If the problem continues, American steelmakers could go out of business – and that’s a huge problem, considering we need steel to build everything from aircraft carriers and tanks to bridges and the electric grid.

Right now, it appears there’s internal debate happening in the White House over how best to address the problem. Some advisers want Trump to issue across-the-board tariffs on steel imports, while others are lobbying for a more tailored approach that goes after China and countries that it ships its steel through to avoid tariffs already on the books, like Vietnam.

Meanwhile, the Europeans and other traditional U.S. allies like Canada, Brazil and Japan are closely watching the Section 232 case.

Now, nearly everybody agrees with the United States that China’s overcapacity is at the heart of this whole issue. During the last G20 summit, then-President Barack Obama pushed for action on steel, which eventually led to the establishment of a “global forum” to find solutions. 

But while there's widespread agreement that China is the problem, America’s traditional allies are also leery of what might happen in the Section 232 case, and it is causing tensions.

This might actually provide an opportunity for Trump to use the investigation to convince other G20 nations to do more to tackle China’s overcapacity. Here’s the Washington Post:

Trump's advisers plan to push other countries at the G-20 to agree to concrete steps that would crack down on the way China exports steel, people briefed on the planning said, and if Trump is successful in this effort it could buttress his willingness to challenge other countries on a range of issues.

So will Trump’s diplomacy work? The White House claims the president already discussed “global steel overcapacity” in a pre-summit call with Merkel, so he appears to be laying the groundwork. And given that the Europeans want to discourage Trump from issuing tariffs that could impact their own steel exports, they might be willing to play ball.

But remember that China will also be in the room, and the Chinese have been pretty darn effective at watering down much of the G20’s efforts in the past. Much of the tension that exists between the United States and Europe wasn’t an issue during last year’s summit, and nearly everyone agreed that China’s overcapacity needed to be addressed. China still managed to make sure that nothing concrete came out of the summit.

One thing is clear: China is playing the long game. It has broken promise after promise to cut back on its steel production, and is counting on continued inaction so it can capture market share and put U.S. companies that play by the rules out of business.

We hope that G20 nations will finally collectively take concrete action to effectively address China’s out-of-control steel overcapacity.

But given the group's track record, we aren't holding our breath. Regardless of what happens in Germany this weekend, we hope the president will uphold his promise to safeguard American steel from foreign threats.