Trump Threatens Sanctions Over Chinese Steel

US President Donald Trump threatened retaliatory action against two major Asian trading partners overnight on Tuesday, warning of sanctions against China while vowing to revise or scrap a free trade deal with South Korea.

Accusing Beijing of decimating American steel and aluminium industries, Trump said he was "considering all options", including tariffs and quotas.

Trump recently received two Commerce Department reports concerning alleged Chinese subsidies for steel and aluminum exports – materials that are vital for industries from construction to autos.

He has another two months to decide on possible retaliatory action, but strongly indicated that he is leaning toward hitting back at Beijing.

"I will make a decision that reflects the best interests of the United States, including the need to address overproduction in China and other countries,' he said.

Experts believe any US sanctions would prompt China to respond with sanctions of its own, raising the specter of a trade war between the world's two largest economies.

The US trade deficit – which Trump has vowed repeatedly to fix – widened even further during his first year in office, up 12 percent to US$566 billion.

"They're dumping and destroying our industry, and destroying the families of workers, and we can't let that happen," Trump told a group of Republican and Democratic lawmakers at the White House.

Trump received some support from the group, but also warnings that action against China could drive up prices and hurt US manufacturing outside the steel and aluminum sectors.

"Mr President, I think we do need to be careful here, that we don't start a reciprocal battle on tariffs,' said Republican Senator Roy Blunt. (AFP)