Chilean deputies announce project to apply a 50% tariff on Chinese steel

A group of Chilean deputies announced this Friday that they will present a constitutional reform project to apply a 50% tariff for three years on Chinese steel with the aim of avoiding the closure of Huachipato, the country’s main steel producer, which announced the suspension indefinite suspension of its operations due to the impossibility of competing against the Asian giant.

Specifically, the initiative promoted by congressmen from the Biobío region, where the Huachipato site is located, establishes “a transitional period of three years to apply a specific tariff to products from China that contain steel or that compete with steel to the disadvantage of Chile“said deputy Joanna Pérez.

“We need this background to be reviewed, but also from the Chamber of Deputies we are going to take all kinds of actions to show that this is insufficient and make visible our regional problems due to the possible loss of employment.“added the parliamentarian.

The board of directors of the steel company announced on Wednesday that it is suspending its operations “for an indefinite period” given the critical situation it has been going through for more than a decade and after considering the anti-dumping measures against steel from China, a country with which Chile has a treaty, insufficient. free trade since 2006.

Located in the southern city of Talcahuano, 500 kilometers south of the capital, Huachipato made the decision a day after the Anti-Distortion Commission, an independent institution that advises the Chilean Presidency, recommended applying an average tax of 15.3% to three Chinese companies that import steel balls.

For the company, which generates close to 20,000 direct and indirect jobs and recorded losses of US$ 385.5 million in 2023, the figure is “insufficient” and is not enough to solve the distortions that Chinese steel is producing, which is 40% more cheaper than the Chilean, according to his calculations.

“we are in mourning“, the president of the Huachipato Workers’ Union No. 1, Héctor Medina, told the media, who assured that the surcharges have to be at least 25% for steel bars and 33% for steel balls to be able to compete on equal terms.

In the last two decades, China has gone from being a large importer of steel to one of the main producers in the world, going from producing 15% of the world’s steel in 2000 to 54% in 2023, according to Alacero, the employers’ association that brings together the large Latin American steel companies.

Despite being a relatively small company in the world steel market, with a production of one million tons per year, the situation in Huachipato has raised alarm bells in the region, where part of the steel that the Asian giant could not place arrives. its market due to the slowdown of its economy.

The European Union and more than fifty countries, such as the United States, Mexico, Canada, Brazil and India, have applied antidumping measures in recent years to balance the distortions caused in local markets by Chinese steel.