Posted on 03/02/2018 6:13:39 AM PST by reaganaut1
Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.
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The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share. The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well.
Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.
Instead of importing steel to make goods in America, many companies will simply import the finished product made from cheaper steel or aluminum abroad. Mr. Trump fancies himself the savior of the U.S. auto industry, but he might note that Ford Motor shares fell 3% Thursday and GM’s fell 4%. U.S. Steel gained 5.8%. Mr. Trump has handed a giant gift to foreign car makers, which will now have a cost advantage over Detroit. How do you think that will play in Michigan in 2020?
(Excerpt) Read more at wsj.com ...
Trump pretty much promised this during the campaign.
Good for Mr. Trump and the GOPe/WSJ can go straight to hell.
Funny, the Wall Street Journal supports sanctions on products from Iran and Russia. Sanctions are more than tariffs - they are total bans on imports. So the Journal is ok with stifling free trade and raising the price, say, of oil - but not when it’s done for the purpose of reviving the American steel industry
The question is do we want to have a domestic steel industry, or be completely dependent on foreign supply? I say we need one, and if paying more for some products is what it takes so be it.
They are produced in the U.S. in more than modest quantities. We exported 7.6 million metric tons in the first three quarters of last year, mainly to Mexico and Canada. The two countries who export to us and who we are going to hit with a 25% tariff. We import virtually no steel at all from China.
We also exported almost three million tons of aluminum.
Can anyone speculate how this affects the recycle and scrap business?
Those prices have been way down for quite a while.
Ironically, the GOP of Lincoln, McKinley, Teddy Roosevelt, Coolidge, Ike, was protectionist. Eve Reagan imposed tariffs to protect US jobs. In cotrast, today’s GOP establishment is globalist, not nationalist
There is something much bigger at play here. In a few weeks SCOTUS is going to vote on Janus v. Federation of State, County and Municipal Employees. If Janus wins, (the vote was deadlocked at 4 to 4 because of the death of Scalia and now Gorsuch is seated) union workers will have the choice on whether to pay dues or not. A win here and for the most part unions will be financially decimated which will lead to right to work votes.
When this happens, the price of steel will come down, quality will go up which will lead to more foreign and domestic sales.
For 18 months Trump has implemented his agenda to the benefit of the American people. This move solidifies the rust belt as Republican.
“A lot of people around here apparently have no problem with Trump’s spending and debt so where’s the difference?”
They are an economic newspaper.
"Bridge Comes to San Francisco With a Made-in-China Label"
http://www.nytimes.com/2011/06/26/business/global/26bridge.html
Trump was above board about this in his campaign. If fact, it was a central part of the campaign.
We discussed it then.
Will prices rise. Yes.
But...manufacturing jobs will remain here, wages will rise, we will have our vital industries here, our nation will be enriched, slave labor nations will not live at our expense.
Probably unnecessary.
As with every other move DJT makes, some judge who considers himself king of the world will likely deem this "unlawful" and throw it out.
Awhile back I was watching a news segment about (of all things) door-locking mechanisms in cars. A Chinese company was selling them to US car manufacturers for less than $1 a unit. Their goal was to drive the US producers out of business.
And according to the report, the Chinese strategy was working.
Now my car costs, maybe, $25 less than it would otherwise. And another American industry is destroyed. Tragic. So yeah, I’d listen to a pro-tariff argument.
Side note: I suppose that some folks could say just hit China with a “dumping” fine here. But suppose those locking mechanisms really did cost less than $1 each to produce?
A news article from December that looks related to the tariffs. Looks like the Chinese have been trying to get around existing trade agreements to put it to the US.
So, if we’re exporting Steel and Aluminum to Mexico and Canada then why are we importing, from who and are they dumping it?
Why does it matter if we slap tariffs on them when we and exporter nation?
Politicians buy votes. Democrats import foreigners, which buys their votes.
That Blue Wall that elected Trump just got its reward for those votes.
But when the Federal Reserve raises the cost of money on everybody and causes recessions that result in trillions of dollars of lost opportunity, the WSJ doesn’t care.
I’d rather Trump have a weapon he can use in trade negotiations than to have the Fed manipulating interest rates.
China is the 11th largest source for our imported steel, behind Canada, Mexico, South Korea, Taiwan, Japan, Brazil, Russia, Turkey, India, and Germany. We import very little from them, less than 1 percent of our total imports.
You are exactly right.
This is a power play. Trump does not believe the tariffs will continue beyond the point China sets realistic prices.
Ask yourself how much steel or aluminum is in that $1,000 dishwasher or $80,000 pickup truck.
Why does a bare bones pickup cost $35 or $45,000 and the super model cost $80,000? Each has the same steel and aluminum by weight.
The cost of the steel by weight is probably only 10% of the total price.
The rest is labor. When you get to the bottom line, everything is labor. Even the cost of the steel is labor.
So a 25% increase in only 10% of the cost is only .025.
But it makes for a great excuse to raise prices by 10 or 15%.
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