China’s Record Steel Exports Put U.S. Industry Under Pressure as “Milwaukee Framework” Targets Global Overcapacity
A new international framework agreed in Milwaukee is putting China’s steel overcapacity at the center of a broader effort to address a problem that directly affects American manufacturers, workers, infrastructure suppliers and industrial resilience. At the September 30 ministerial meeting of the Global Forum on Steel Excess Capacity, 28 participating economies adopted what they called the “Milwaukee Framework,” a coordinated approach intended to confront rising excess production, subsidies, low-priced exports and attempts to route steel through third countries to avoid trade restrictions. U.S. Trade Representative Jamieson Greer chaired the meeting and said participating governments would work together on measures addressing the growing imbalance in global steel markets.
The scale of the problem is substantial. The OECD estimates that global excess steelmaking capacity reached roughly 640 million metric tons in 2025 and could rise to 745 million tons by 2028. That projected surplus would exceed the current combined annual steel production of OECD countries by roughly 319 million tons. Global demand, meanwhile, is expected to grow only slowly, creating an increasingly large gap between the amount of steel the world can produce and the amount customers actually need.
China occupies a particularly important position in that imbalance. OECD analysis says China accounted for about 54% of the global capacity-demand gap in the third quarter of 2025. With domestic construction and other sources of steel demand slowing, Chinese producers increasingly turned abroad. China exported a record 131 million metric tons of steel in 2025, equivalent to roughly 14% of its crude-steel production and 153% more than it exported in 2020. That export volume alone exceeded the European Union’s total steel production in 2025.
For the United States, those numbers matter even when Chinese steel does not enter the American market directly. Trade barriers can redirect Chinese output toward Europe, Latin America, Southeast Asia and other markets, depressing international prices and increasing competition for American steelmakers trying to sell abroad. Steel can also move through downstream products or third countries, making the effects of Chinese overcapacity harder to isolate using simple import statistics.
The OECD has specifically highlighted signs of circumvention. Its 2026 Steel Outlook found sharp increases in Chinese exports of certain steel products to Southeast Asia alongside increased shipments of similar products from Southeast Asia into OECD markets. China’s exports of semi-finished steel to Southeast Asia increased roughly 300% in 2025, according to the OECD. The organization cautions that such patterns can weaken the effectiveness of anti-dumping and countervailing measures designed to address unfairly traded steel.
This is one reason the Milwaukee Framework goes beyond a single tariff. Reuters reported that the agreement encourages participating countries to make greater use of anti-dumping, anti-subsidy and safeguard investigations, while improving information sharing on the actual origin of steel entering national markets. The objective is to identify the production source rather than focusing only on the final country from which a shipment happens to arrive.
The subsidy issue is also central. According to the OECD, the median Chinese steel firm in 2024 received subsidies equal to a share of assets roughly 15 times higher than the comparable median producer elsewhere. The OECD argues that government support can keep inefficient capacity operating even when normal market conditions would force reductions, closures or consolidation. When domestic buyers cannot absorb the resulting production, steel is often sold into foreign markets at low prices.
That dynamic can affect the United States in several ways. American steelmakers face global price competition, while steel-dependent manufacturers can benefit from cheaper inputs. The effect is therefore not one-directional: inexpensive steel can reduce costs for construction companies and manufacturers that purchase large quantities of metal, while prolonged low prices can make it harder for domestic mills to justify new furnaces, modernization projects and additional capacity.
The strategic concern is that steel is more than an ordinary consumer commodity. It is fundamental to bridges, railroads, pipelines, electrical infrastructure, ships, military equipment, heavy machinery and industrial construction. A country that loses too much domestic production capacity may find that restoring it during a crisis requires years of investment, permitting, workforce development and equipment procurement.
The Milwaukee Framework reflects an effort to deal with that problem collectively rather than allowing Chinese overproduction simply to move from one export market to another. If one country imposes barriers while neighboring markets remain open, exporters can redirect shipments or process material elsewhere before sending it into the protected market. Coordinated information sharing and trade enforcement are intended to make that strategy more difficult.
China is not the only country expanding steel capacity. India and Southeast Asia are also adding production, and the OECD explicitly identifies capacity growth outside China as part of the broader global problem. India, for example, is planning a major long-term expansion, while Southeast Asia has attracted substantial new steel investment. The distinction in China’s case is the combination of enormous existing scale, weak domestic demand, extensive state support and the extraordinary surge in exports.
OECD projections indicate that China could add as much as 38.6 million metric tons of additional steelmaking capacity through 2028, the largest planned national increase currently identified in its outlook. Whether closures elsewhere in China will offset that expansion remains uncertain. If they do not, the gap between production capacity and domestic demand could continue pushing Chinese mills toward foreign customers.
That connection between weak domestic demand and exports is important for Americans to understand. A slowdown inside China does not necessarily reduce pressure on foreign manufacturers. In steel, weak Chinese construction and infrastructure demand can produce the opposite result: mills seek buyers overseas to keep capacity operating and maintain cash flow.
The pattern closely resembles the broader imbalance visible across parts of China’s manufacturing economy. Beijing has spent years emphasizing industrial production, scale and advanced manufacturing, while household demand has remained comparatively weak. The resulting output can exceed what the domestic economy can comfortably absorb, making foreign markets increasingly important. In steel, the numbers make that dynamic unusually visible.
There is also a technological and environmental dimension. Market-oriented steelmakers are being asked to invest heavily in lower-emission furnaces, cleaner energy, automation and higher-quality specialty products. Companies operating under persistent price pressure from subsidized or loss-tolerant competitors may have fewer resources available for those investments. The OECD argues that chronic excess capacity therefore undermines both innovation and the long-term financial sustainability of the industry.
At the same time, trade restrictions carry costs and tradeoffs. Higher barriers can raise the price of imported steel for manufacturers, builders and infrastructure projects. Poorly designed restrictions can also protect inefficient domestic producers or trigger retaliation. The relevant policy debate is therefore about how to distinguish genuinely distortionary excess capacity and subsidized exports from ordinary international competition, while preserving reliable supplies for industries that consume steel.
The Milwaukee Framework does not create one uniform global tariff. Participating governments retain discretion over their own measures. Greer said each country would decide what action it considered appropriate, while the framework is designed to coordinate those responses. Reuters reported that some participating governments, including Poland, have publicly identified heavily subsidized Chinese steel as a direct problem for their domestic industries.
The framework also comes as broader G20 discussions increasingly focus on “non-market” policies and excessive reliance on exports. At an earlier G20 finance ministers meeting, all participating economies except China supported language calling for action against policies and trade distortions that generate excessive production and export dependence, according to Reuters. The disagreement illustrates how overcapacity has moved from a narrow steel-industry dispute into a broader question about the structure of China’s economic model.
For U.S. industry, the most important point is that the pressure does not stop at the American border. Chinese steel sold cheaply in Brazil, Europe, Mexico or Southeast Asia can alter global prices, displace American exports and reshape investment decisions even when direct Chinese shipments into the United States face high tariffs.
The downstream effects matter as well. Excess steel can be incorporated into machinery, vehicles, fabricated structures and other products that later enter the U.S. market. That makes the origin of the underlying metal increasingly important to trade enforcement and explains why the Milwaukee Framework emphasizes greater transparency concerning where steel was actually produced.
China’s record 131 million tons of exports therefore represents more than a large trade statistic. It shows how weak domestic demand inside the world’s largest steel-producing economy can spill into international markets. When production remains high while local consumption weakens, foreign buyers become the outlet.
The Milwaukee Framework marks an attempt by the United States and other participating economies to respond collectively to that structural pressure. Whether the framework ultimately changes production decisions in China will depend on how participating governments implement it, how Beijing and Chinese steelmakers respond, and whether new capacity continues to enter the market.
For Americans following industrial competition with China, the core issue is concrete: steel remains essential to economic and national-security infrastructure, while the world is moving toward even greater surplus capacity. China’s unprecedented export volume and scale make it central to that challenge. Understanding where the steel is produced, how it is subsidized, where it is rerouted and how it affects U.S. producers will determine whether the Milwaukee Framework becomes a meaningful change in global steel policy or simply another layer of trade defense around an expanding structural imbalance.
