Posted on 05/22/2016 10:35:05 AM PDT by Kaslin
China produces more than 820 million tons of steel per year, of which about 100 million tons are exported and sold at a discount overseas. Only about 3 percent of those exports go to the United States, but American steel producers bristle at the competition. So in keeping with the time-honored practice of the US steel industry — "the backbone of American manufacturing," as it proudly calls itself — domestic producers are rising to the challenge.
Are they doing so by making their operations more efficient? By improving the quality of the steel they sell? By cutting their prices to maintain market share in the face of a tough competitor?
Not exactly. They're getting the federal government to punish American consumers.
"The United States on Tuesday said it would impose duties of more than 500 percent on Chinese cold-rolled flat steel, widely used for car body panels, appliances, and in construction," reported Reuters. "The Commerce Department said the new duties effectively increase more than five-fold the import prices on Chinese-made ... steel products."
American steel producers complain that their counterparts in China are "dumping" cheap steel on the US market, benefiting from Chinese tax subsidies to undercut other companies' prices. Because of these "unfairly traded imports," lament Thomas Gibson and Chuck Schmitt of the American Iron and Steel Institute, some US steel mills have had to be shuttered, and 12,000 steelmaking jobs were lost during the past year. p>It is always painful when workers are laid off and once-thriving facilities have to be closed. But the steel industry is far from unique. The US economy creates and destroys millions of jobs every year. No industry is exempt from the upheaval, retrenchment, or losses caused by changes in technology, trade, and consumer demand. The digital revolution has decimated once-formidable companies and careers in fields as different as journalism, instant photography, tax accountancy, and recorded music. Would anyone argue that the government should have suppressed the internet in order to preserve the employment and production patterns of the 1980s? Should the Commerce Department have imposed taxes of 500 percent on e-mail services and word-processing software so preserve the viability of typewriters and stenographers?
For that matter, as economist Don Boudreaux has remarked, should the polio vaccine have been taxed into unaffordability for the sake of all the jobs that were once linked to the care of polio victims?
Sooner or later, competition and disruption challenge every industry and market. The pain they can inflict is real, but far greater and more enduring are the benefits and prosperity they generate. American steel mills are understandably chagrined that competitors from China are beating them on price. But cheaper steel also means more affordable cars, homes, and appliances for tens of millions of Americans. It means more employment at General Motors, Boeing, and John Deere. Jacking up steel prices through "antidumping" tariffs and other protectionist measures makes life more expensive for all of us, and jeopardizes far more jobs than it saves.
There is nothing nefarious about Chinese mills selling steel at bargain prices in the United States and other foreign countries. Companies routinely mark down the price of their merchandise — in clearance sales, as loss-leaders, for promotional purposes, or simply in response to local conditions. The Commerce Department, and the US producers clamoring for punitive tariffs, claim that Beijing is subsidizing Chinese steel exports. Even if that's true, why should Americans object? We aren't being harmed by China's gift — we're being enriched. It is the federal government and its tariffs that harm us, by deliberately making steel more expensive and thereby making US consumers poorer.
For years, American steel companies have bellyached about foreign competition, and for years Washington has responded with quotas, tariffs, "voluntary-restraint" agreements, and other restrictions on free trade. The Obama administration, like the Bush 43, Bush 41, Reagan, Carter, Ford, and Johnson administrations before it, has yielded to the industry's unreasonable demand for more trade barriers and corporate welfare. It's a pity. Nucor, Steel Dynamics, United States Steel and other American producers should be told to man up and face their competition in the marketplace. They shouldn't be rewarded for hiring lobbyists and publicists to wangle special-interest privileges that no business has a right to claim.
It is irrational to attack foreign exporters for not charging us higher prices. And it is preposterous to whine that Chinese steel is being "dumped" on the US market. Steel that enters the United States has been sold by a specific Chinese producer and bought by a specific American buyer. The transaction is voluntary, the price has been mutually agreed to, and the benefits ripple outward through the entire economy. If domestic steel producers want that buyer's business, let them earn it the old-fashioned way, by outperforming their Chinese counterparts on price and quality. Protectionist tariffs are for crybabies, not for the backbone of American manufacturing.
Well, when US producers pay 35% tax and have a ton of other regulations and taxes, I completely understand it.
It’s like we playing a game of basketball and we insisted on placing our team in the locker room during the match. Is it a wonder other countries are getting our manufacturing jobs?
Even Canada and the EU have a fraction of our taxes on business. It’s crazy.
They could be more efficient by removing their pollution controls, as is done in China:
Their quality is probably already better than Chinese steel.
As far as cutting price, why should American steel workers have to compete on price with a workers who get paid a few dollars a day?
Jacoby outs himself as a Free Traitor.
By the way, Jeff is obviously completely ignorant. Why post stupid?
The Chinese aren’t selling their steel cheap out of the kindness of their hearts.
China has a wholly different type of economy. If the government targets a foreign producer and decides to drive them out of business, they can do that. One producer may have an advantage in one way or another. But free trade implies that the producers are otherwise equal. This is not the case with communist suppliers. In the labor market a Chinese must have the permission of the government to leave his job, making him a slave. Also, China has developed many times the necessary production capacity to supply steel to their ghost cities. Now it sits idle, so they can sell well below the prices of competitors who live in a real market economy.
I no longer believe in free trade because there is no such thing between societies so different from one another. The TPP may well spell the end of American production of just about everything.
If another country wants to tax its citizens to discount prices to us on any commodity, take it.
So-called free trade is a one-way street. We take all their stuff, and they use various laws and rules to block out ours. Our shelves are filled with Chinese goods. Needless to say, they sell very little American stuff.
And the same is true of most of the other countries of the world. We take Mexican stuff, they block ours. We take French stuff, they block ours.
When I was a kid, there were factories all over the place where you could find a job. Now, almost all of them have shut down. And the balance of payments deficit has been killing us for years.
Even if it destroys our steel industry, which is vital for our national defense?
Was this written in the 1970’s?
Because, the situation they describe occurred in the 1970’s, not today (on the steel dumping countries were different).
And,we know how that ended up. The American steel industry was decimated. Tens of thousands of Americans lost their jobs. Entire regions were destroyed economically.
Absolutely correct. To think otherwise is to accept the USA as an economic colony of China.
That's why we'll never be free until they're hanging from a tree.
They never mention the National Security dynamics of owning the means of industrial production, agriculture, transportation, technology, and commodities...to include energy. Nor do they address the long term transfer of wealth...the transfer of Capital Stock the likes of which has never before been seen.
Except maybe the Roman Empire and the Egyptian Empire before it.
I am so sick of “free traitors”. America became an industrial superpower with the judicious use of tariffs on imported goods. It is the only way we can level the playing field against state-owned industries in Europe and Asia.
FYI, Chia became and industrial superpower through tariffs and other protective measures so it does work even in modern times.
And when all of your industries have been hollowed out and your income is stolen from you to pay for an entire nation of welfare and enslaved YOU will be the first cuckservative to scream "Let them starve, they are losers!"
The one column I remember, having just bought a house, was on his returning to his "roots" as a Czech Jew, berating the current owner of the house his ancestors once occupied. I remember thinking "Thank God for title insurance..."
I figured it was post Nazi stress or something. This was in the Boston Globe, btw. Pre-Slimes, iirc.
Little did I know it was an indication of deeper maladjustments.
I certainly disagree with this.
Over the past 2 years Saudi Arabia has dumped its oil on the world market with one purpose....run the American fracking/wildcat operators out of business. 2/3rds of them are gone, gobbled up by the bigs, and the other third are in line to be gobbled up.
Who really are the bigs except for comglomerates with how many owing allegiance to what country sitting on their boards of directors?
You don’t just run an industry out of business. You make it susceptible to takeover. And then the dumpers control the market and they raise the price beyond what any tariff would have cost.
Check out oil in 18 months. Probably back to 100 a barrel after its low of approx. 25 dollars. And why was it so low? So Saudi could run the Americans out of business.
Jacoby is hardly neither completely or partially ignorant.
Post-Civil War, as the Industrial Revolution gained impetus, our crony capitalists, bought and received a protectionist trade policy from the GOP. Always masterful at malarkey for the gullible, these political frauds and hustlers sold it as a necessity to shield our “infant industries”; complete and utter bullshit. Quotas and tariffs were imposed to bar superior manufactured goods from Britain and particularly Germany, after their unification in 1870. Incidentally, these barriers to free trade played a critical role in lengthening and increasing the severity of the Great Depression. So much for the republicrats as the party of Free Traders!!!
Take a look at the American System early in our history.It was proposed by Alexander Hamilton. Also, see the work of the German economist Friedrich List. Their work would have to be refined and updated but would apply to the correction of today’s screwed up economy. The economic policies of the last 50 to 60 years have systematically destroyed our economic base. Wealth is only created by the transformation of raw materials into usable goods.
And the US consumers who benefit from the cheap Chinese steel can get jobs at the Chinese steel factories.
See? Now every one is happy.
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