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. Last Updated: 07/27/2016

Big Steel Reels as China Slaps Tariffs on Imports

Russian steel is coming under fire again, this time from China.

On Wednesday, the people's republic slapped protective tariffs on steel imports.

The tariffs will be between 18 percent and 26 percent and will come into effect Friday, Economic Development and Trade Minister German Gref said after meeting his Chinese counterpart Shi Guangsheng in Moscow. The tariffs will apply to amounts imported above set quotas for all steel-producing countries.

Russian steel exports to China are estimated at about 2 million to 3 million tons per year, or about 7 percent to 10 percent of total exports in 2001. The bulk of the country's steel production, approximately 80 percent, is exported.

Russia is negotiating an 11th-hour agreement with China for quotas that would be equal to regular volumes, Gref said.

Such quotas, which could be 10 percent higher than the historic volumes, would allow exports to continue at about current levels, although time is running out, said Andrei Shikhanovich, a trade manager at steel giant Severstal. Without such an agreement, Russia will have to race against other countries to export as much as possible before the tariffs come into effect, he said.

China granted Ukraine a six-month quota of 712,000 tons Wednesday.

The tariffs continue the domino effect started by the United States when it imposed tariffs on steel imports in March, steel producers said.

Steel prices on world markets have risen since the beginning of the year, but the effect is likely to be offset by a squeeze on volumes due to tariffs and protective measures, said Maxim Matveyev of Alfa Bank.

"Asia is an extremely important region for Russia. China could be a signal to other countries to impose protectionist measures," said Renaissance Capital's Vladimir Titkov.

Russia has already indicated it could follow suit, imposing tariffs on steel from former Soviet republics.

"We hope the government will look at the issue from the point of view of protecting Russian industry and will take adequate measures, such as tariffs," said Andrei Sidorov, a spokeman for top three producer Novolipetsk.