China’s peak steel industry body has warned of further possible retaliation against US tariffs, just days ahead of trade talks between representatives from Beijing and Washington.

The China Iron and Steel Association, which represents more than 80 per cent of the country’s steel production, said it was still assessing the potential impact of US protectionist measures announced a month ago.

It did not detail possible countermeasures but the association had previously suggested tariffs on American coal and electronics.

“We will actively respond to trade protectionism to defend the interests of the steel industry and will firmly support any necessary measure taken by the Chinese government,” association secretary general Liu Zhenjiang was quoted as saying in a statement on Friday.

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Washington has long blamed Beijing for an international glut of steel and job losses in the US industry, prompting a decision by the administration of US President Donald Trump to slap a 25 per cent tariff on steel imports, with exceptions for steel from the European Union, Mexico and Canada.

The association said the decision violated the rules of the World Trade Organisation, escalated bilateral trade tension and brought great uncertainties to China’s steel exports.

Shipments of Chinese steel products dropped 26.4 per cent year on year to 15.2 million tonnes in te first quarter, and the falls could continue if other countries follow the US’ lead.

Beijing has proposed reciprocal tariffs on US products such as seamless pipes, fruit and wine, and also requested a dispute resolution procedure with the WTO.

Washington and Beijing have sparred over retaliatory trade measures for more than a month but will finally sit down for three days of direct talks from Thursday.

The US delegation is led by Treasury Secretary Steven Mnuchin and US Trade Representative Robert Lighthizer.

Beijing maintains that it exports only about one-tenth of the national steel output and has slashed more than 100 million tonnes of capacity in the past three years.

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But there are doubts about the cuts, with average daily crude steel output hitting a historic high of 2.36 million tonnes in the first quarter. That equates to an annualised 860 million tonnes, compared with 832 million tonnes of actual output last year.

The association attributed the rise in production to increases in output by non-member firms, which jumped 17.2 per cent year on year in the period, and “profit-driven capacity expansion”.

“Overcapacity has not be solved fundamentally,” it said.

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