Now, before you get all flame happy, hear me out. Wouldn't the best way to deal with 'dumping' is to bankrupt the dumper? If I can get a comodity dirt cheap, why not exploit it? And before you preach to me about American jobs, well, the way I see it, you have two entities trying to mess with free markets. Chinese steel producers and American steel worker unions. One wants me to pay more than the market price for steel, and the other, less. What does the steel workers union do for me? Sure, the unions will say, keep the money in America. But if I can buy something made of steel more cheaply, I can keep the money in my pocket
Okay, let the flaming begin!
And then we’ll have no steel factories and the chinese can charge whatever they want. Dumb solution.
I suppose the concern is that if China subsidizes their steel industry to the point that competition can be destroyed they can raise the price later with impunity.
I do not know how serious a threat that scenario is because I don't know the numbers nor do I have a good feel for how long it takes to tear down or build back up competition.
Not enough money to bankrupt the Chinese. Okay, maybe by printing another trillion US debt notes and buying steel with that ‘money’. But then you still end up with the debt.
No flames here, just logic. You have an interesting premise. Let’s say that there are two animals living in a cage where only enough oxygen can get in to nourish them if they both act the same way. One animal decides to consume all the oxygen. The other animal will quickly die and then there will be just one.
Once there is just one animal, what do you think will happen to the price of steel?
You can’t shut down the steel production in the US and wait for better times. Once shut down the creditors will sell the assets and there will be nothing to restart. What the Chinese are doing is no different than the nineteenth century cartels.
Economic Free Trade radicalism = the road to socialism.
One other parameter that I think you overlooked is that China essentially uses slave labor. Flooding the market with steel that would bankrupt an American is not necessarily a hardship for a Chinese company that pays its workers a few dollars a day.
If the playing field were equal, then the dynamics would be different: any given company would have only a limited ability to flood the market.
But that’s not what we have. China’s ability to flood the market is as expansive as its population.
One other consideration is Chinese quality control: it exists on paper. We get the cheap goods, but that old adage “you get what you pay for” is completely true. When you buy steel that does not meet your specifications, did you really save money?
A third consideration is that our manufacturing base is shrinking, and our economy is only as large as our ability to manufacture products. If no one is manufacturing anything, we have no economy. Sure, we can keep the printing presses rolling, but the money we print is worthless without a GDP to give it value. At some point, the Chinese are not going to be satisfied with receiving money that is worth nothing—they actually do want something of value for the stuff they are dumping on our market.
Do you support antitrust laws?
What you say (buy the cheap steel, let the chips fall where they may) would be fine IF opening and closing our plants, including retraining workers and tooling up equipment were not costly in terms of money and time, and if a certain amount of steelmaking capacity was not also a strategic necessity.
If China were to dedicate itself to supplying all of the world’s steel at a loss, say for domestic employment reasons, and no one were worried about not being able to make their own in a possible time of war, or downstream monopolistic behavior, it would make sense to let them do it. But, there are other considerations.
It’s an old trick, lower your prices until your competitors go out of business, then you can charge whatever you want. It’s called monopoly capitalism. Once our industry is gone it won’t come back cheaply or quickly. Maybe never. That’s why the Saudis are glutting the market with oil. If they can keep the price down our domestic production companies will go out of business, and it would take a decade or more to bring it back. Our founders understood it, and that’s why they were advocates of tariffs.
Short sighted stupidity. This is what afflicts the Wall Street idiocy. The aim of such tactics is to destroy the competition - then once that is done the prices go up. Once an infrastructure is gone it is almost impossible to re-create it.
In the meantime the American economy is hurt by loss of jobs, etc. So the savings gained from buying steel by a manufacturer are not worth it in the long view.