Huachipato Resumes Operations After Chile Imposes Tariffs on Chinese Steel

Chile's largest steel company, Huachipato, resumes operations after a month-long suspension due to cheaper Chinese steel imports. The Chilean government imposes provisional taxes on Chinese steel to allow Huachipato to compete, raising concerns over potential trade tensions with China.

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Nasiru Eneji Abdulrasheed
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Huachipato Resumes Operations After Chile Imposes Tariffs on Chinese Steel

Huachipato Resumes Operations After Chile Imposes Tariffs on Chinese Steel

Huachipato, Chile's largest steel company, has announced the resumption of its operations after a month-long suspension. The company had suspended its activities due to an influx of cheaper Chinese steel imports that threatened around 23 direct and indirect jobs.

The Chilean government has established provisional taxes on Chinese imports of steel bars and balls, at 24.9% and 33.5% respectively. These steel inputs are fundamental in the copper grinding industry, where Chile is a global leader. The taxes are intended to allow Huachipato to function in a competitive market.

Huachipato's Board of Directors decided to reverse the indefinite suspension process and will continue its activities as long as the surcharges remain in force. The company stated that the tax burdens on its Chinese competitor are "provisional measures" and expressed hope that these would be confirmed with definitive measures.

The Latin American steel industry has been alarmed by the surge in Chinese steel imports, which have grown from 15% to 54% of the global steel market over the past two decades. Chile now awaits possible trade retaliation from China, with whom the country has a Free Trade Agreement.

Why this matters: The imposition of tariffs on Chinese steel imports and Huachipato's resumption of operations highlight the challenges faced by domestic industries in competing with cheaper foreign imports. This development also underscores the potential for trade tensions between Chile and China, which could have broader economic implications.

In a statement, Huachipato emphasized the importance of the provisional taxes in allowing the company to compete on an even playing field. The company expressed optimism that the measures would be made permanent, ensuring the long-term viability of Chile's steel industry and protecting jobs in the sector.

Key Takeaways

  • Huachipato, Chile's largest steel company, resumes operations after suspension.
  • Chilean govt imposes provisional taxes on Chinese steel imports (24.9% and 33.5%).
  • Taxes aim to allow Huachipato to compete in the market against cheaper Chinese steel.
  • Latin American steel industry alarmed by surge in Chinese steel imports (15% to 54%).
  • Chile faces potential trade retaliation from China, with whom it has a Free Trade Agreement.