A trade disagreement between the U.S. and China boiled over on Wednesday, with Beijing demanding the removal of a new 500% duty on some of its steel products.
The escalation follows a ruling by the U.S. Department of Commerce on Tuesday that dramatically increases duties on Chinese cold-rolled steel, which is used to make appliances, cars and electric motors.
Trade tensions between the U.S. and China have risen considerably this year -- especially over steel. Last month, U.S. Steel (NYSE: X) accused many Chinese producers of breaking trade rules, and asked the U.S. International Trade Commission to investigate. China produces half of the world's steel, more than the U.S., European Union, Russia and Japan combined.
But as the country's massive economy slows, internal demand for steel is dropping. Beijing now stands accused of dumping its unwanted metal on other markets, forcing rivals to close their plants and killing thousands of jobs.
China maintains overcapacity is a global problem brought on by weaker demand. Beijing says it is willing to work toward a solution and has announced 500,000 job cuts in its own steel mills.
The U.S. has responded with tariffs on Chinese steelmakers. The E.U. has also imposed a tariff of up to 13% on Chinese imports. Beijing pushed back with "anti-dumping" measures of its own.
