Trump hit America’s allies on trade. Now he wants their help on Chinese steel.

Por Koen Verhelst, Oliver Ward, Stefanie Bolzen — China – POLITICO

BRUSSELS — The Trump administration is quietly pushing to create a coalition of mostly Western allies to counter China’s massive steel overproduction, even as it wages a full-scale trade war with Canada and tensions with the EU persist.

The U.S. is spearheading efforts to agree on a three-part steel plan on the sidelines of a meeting of G20 trade ministers in Milwaukee on Sept. 30 and Oct. 1, six people familiar with the discussions told POLITICO. 

Washington wants its partners to erect a high protective barrier — U.S. duties on steel are 50 percent — while trading more freely among themselves. But that push is being complicated by trade tensions with close allies, making incremental progress on steel more likely than an early breakthrough, added the people, who were granted anonymity, to describe the closed-door discussions. 

The U.S. and Canada have traded retaliatory tariff hikes since talks broke down last month, while the Trump administration has pressed Ottawa to prevent third countries from using it as a back door into the American market. Relations with the EU remain strained despite last year’s trade truce, although Washington and Brussels are broadly aligned on steel tariffs. 

The Global Forum on Steel Excess Capacity, or GFSEC, is a 28-member multilateral forum that to a large extent overlaps with the G20. It includes the United States (this year’s G20 president) as well as Canada, Mexico, Brazil, Japan, South Africa and the U.K. Also on board are the EU and 14 member countries. 

The group’s goal is to keep excess steel out of their markets, particularly from China, which has withdrawn from the forum.

“These countries can still hold each other’s hands when it comes to the basics: recognition that there is a common challenge in the excess capacity coming from China,” said one person with knowledge of the preparations. 

They added that despite the trade tensions between the U.S. and Canada, no delegations have canceled their attendance and “all members [are] working constructively toward the adoption of the framework.”

Excess capacity

The challenge of excess steel capacity continues to mount, with generous government subsidies in steel-producing countries driving output beyond what global demand can support. 

The Organization for Economic Cooperation and Development facilitates the GFSEC and provides technical and analytical support for its work. The Paris-based OECD estimates that global excess capacity will reach 745 million metric tons by 2028, far outstripping demand. Chinese steelmakers exported a record 131 million tons in 2025, a 153% increase from 2020 and more than the EU’s entire steel output last year.

When Beijing quit the forum in 2019, it claimed it had contributed sufficiently to slashing overcapacity. India and Indonesia pulled out as well in the years that followed; all three are in the G20.

Chinese President Xi Jinping is expected in Washington next week for talks with President Donald Trump, offering another test of the increasingly transactional U.S.-China relationship. Although Trump started his second term with a hard-line approach toward Beijing, he has recently softened his rhetoric, insisting last weekend that both sides “want to get along.”

But when it comes to steel overcapacity, the Trump administration is looking for “concrete actions,” a Washington-based industry representative said, adding that the forum has long yielded “more talk” and information-sharing than tangible deliverables. The Office of the U.S. Trade Representative and the European Commission both declined to comment on the negotiations.

Hard sell

Washington’s preferred solution, the industry representative said, is that its allies align more closely with the U.S. approach to steel imports, i.e., by imposing a blanket 50 percent duty. The steep tariff wall would keep subsidized Chinese steel out of their shared market, with preferential access granted to members inside its confines. 

In recent talks with the government of Canadian Prime Minister Mark Carney, for example, the U.S. sought to prevent countries using Canada as a back door for cheap steel products to enter the U.S., according to Canada’s top negotiator. But Washington’s partners are unlikely to commit to a shared trade approach in the near future, the industry representative said, suggesting the Trump administration will have to settle for more incremental progress. 

“There are some other things, including monitoring, that could be done together,” the person added.

Preparations for the framework are progressing well, with the 28 members focusing mostly on how to address the domestic effects of Asian overproduction rather than convincing China and others to stop subsidizing their industries. “The framework is an important step to counter the impact, but further work would be needed to address the root causes over the next few years,” said the person familiar with the preparations cited above. 

Monitoring, financing and trade

The sources said three pillars are central to the framework, which is derived from the so-called Berlin principles that guide the work of the GFSEC.

The first pillar would combine monitoring with rules on the origin of steel, without requiring any reductions in emissions. The central idea is to require importers to certify where the steel was melted and poured, preventing unfairly produced steel from being routed through third countries. Canada, the U.S., Mexico and the EU have such rules already.

Fair governance and curbs on state support for state-owned enterprises would be the second principle, drawing on the OECD’s guidelines.

The final thrust — and the most complicated — would be to coordinate trade policies across the GFSEC. With the U.S. charging 50 percent tariffs on all steel imports and the EU slashing its steel quotas by almost half this year, finding common ground could prove difficult.

The effort underscores the limits of Washington’s go-it-alone approach on trade. 

The Trump administration has downplayed the importance of trade ties with America’s allies, repeatedly belittling relations with Canada, Mexico and Europe. But even for a president with Trump’s unilateral instincts, the challenge of Chinese steel is too great for the U.S. to tackle without help from close trading partners.

The diplomatic push echoes an initiative from the previous Biden administration to craft a transatlantic green steel club with a common protective barrier — an irony not lost on those close to the discussions. Those talks broke down, but some of the career staff who worked on them are still at USTR and feel just as strongly about allied cooperation, according to a second Washington-based industry official.

“They’re wedded to this,” the industry official said, adding that the Trump administration sees steel “as a good project for them to work in this current environment.”

Koen Verhelst reported from Brussels, Oliver Ward and Stefanie Bolzen from Washington. Graham Lanktree contributed reporting from London and Phelim Kine from Washington.

Fonte: China – POLITICO