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Critics of the U.S. action have enumerated a number of reasons for concern, including the possibility of tit-for-tat retaliation from impacted trade partners, a further weakening of the WTO, domestic economic distortions in the U.S. as a narrow industry is protected at the expense of downstream producers, and ultimately, higher prices for consumers.
Most of these points have at least some validity, and some are entirely valid. All should be carefully weighed.
But at the same time there is another side to this coin which doesn’t receive as much attention. The simple fact of the matter is that a number of countries are undeniably engaging in unfair and even predatory trade practices in the steel and aluminum sectors which are damaging to their trade partners.
...
To put the magnitude of the overcapacity issue in perspective: experts maintain that the world needs about 400 million tons of excess steel capacity. Today, we have roughly 730 million tons. About half of that is in China, which has grown to be the world’s largest steel producer.
So Trump may be fighting a larger issue that goes beyond the simple relationship with other countries and the immediate impact that this would have on jobs.
China produces half of the world's steel, and we now have an oversupply that's almost double. If no action is taken, then they could likely increase their share of the world's steel market and wipe out much of the international competition. Because of the levies and duties, we only import around 2% of our steel from China. However, they still import steel to all of the other countries and that has an effect on the global market.
There is going to be pain one way or another. Jobs would be impacted if the Chinese corner the overwhelming majority of the steel market. Jobs will be impacted if we rock the boat with these tariffs. It seems like the tariffs takes the short term pain now approach, instead of the long term pain of the Chinese cornering the market and forcing international steel producers out of business.
I am not an expert on this... I am just researching to understand the issue.
Last edited by DRob4JC; 03-07-2018 at 09:07 AM..
Reason: grammar
Critics of the U.S. action have enumerated a number of reasons for concern, including the possibility of tit-for-tat retaliation from impacted trade partners, a further weakening of the WTO, domestic economic distortions in the U.S. as a narrow industry is protected at the expense of downstream producers, and ultimately, higher prices for consumers.
Most of these points have at least some validity, and some are entirely valid. All should be carefully weighed.
But at the same time there is another side to this coin which doesn’t receive as much attention. The simple fact of the matter is that a number of countries are undeniably engaging in unfair and even predatory trade practices in the steel and aluminum sectors which are damaging to their trade partners.
...
To put the magnitude of the overcapacity issue in perspective: experts maintain that the world needs about 400 million tons of excess steel capacity. Today, we have roughly 730 million tons. About half of that is in China, which has grown to be the world’s largest steel producer.
So Trump may be fighting a larger issue that goes beyond the simple relationship with other countries and the immediate impact that this would have on jobs.
China produces half of the world's steel, and we now have an oversupply that's almost double. If no action is taken, then they could likely increase their share of the world's steel market and wipe out much of the international competition. Because of the levies and duties, we only import around 2% of our steel from China. However, they still import steel to all of the other countries and that has an effect on the global market.
There is going to be pain one way or another. Jobs would be impacted if the Chinese corner the overwhelming majority of the steel market. Jobs will be impacted if we rock the boat with these tariffs. It seems like the tariffs takes the short term pain now approach, instead of the long term pain of the Chinese cornering the market and forcing international steel producers out of business.
I am not an expert on this... I am just researching to understand the issue.
Thanks for this.
My concern is that Trump took action with no preparation. None of his cabinet departments seemed to have any information about the announcement, there were no prepared statements or information to accompany the announcement and it almost seems like he pulled the percentages out of thin air. I dare say it looks like you did more research on the issue than the president.
The U.S. steel industry is facing its worst import crisis in more than a decade. In the aftermath of the Great Recession, steelmakers in other countries, backed by aggressive government support, continued to add production capacity as demand stagnated. The open and large U.S. market became the prime target for the massive excess supply stemming from this excess capacity, and, since 2011, U.S. steel imports have surged and import unit values have plummeted.
...
Surging imports of unfairly traded steel are threatening U.S. steel production, which supports more than a half million U.S. jobs across every state of the nation. The import surge has depressed domestic steel production and revenues, leading to sharp declines in net income in the U.S. steel industry over the past two years (2012–2013), layoffs for thousands of workers, and reduced wages for many more.
So what I am understanding is that the Chinese (primarily, and probably a couple of other countries) is trying to undercut the market, wipe out international competition, and increase their world market share. They are flooding the steel market with excess supply which lowers prices. Many of these Chinese steel producers are owned or controlled by the government, and received government subsidies. So they have they money of the entire national at their disposal to flood the market.
My concern is that Trump took action with no preparation. None of his cabinet departments seemed to have any information about the announcement, there were no prepared statements or information to accompany the announcement and it almost seems like he pulled the percentages out of thin air. I dare say it looks like you did more research on the issue than the president.
We don't know what he knows. However, this has been in the works - so this should not have been a surprise.
To me - from what I am reading - this seems to be the proper long term approach.
Note that in the OP, I referenced penalties on the Chinese import in 2016... that was during the Obama admin. That seemed like that proper action as well.
Please explain how Glass-Stegall impacts steel trade.
Those who justifiably condemn the repeal of the Glass-Steagall law that resulted in deregulating banks have Clinton to blame. According to the findings of the Financial Crisis Inquiry Committee, “The decision in 2000 to shield the exotic financial instruments known as over-the-counter derivatives from regulation, made during the last year of President Bill Clinton’s term, is called ‘a key turning point’ in the march towards the financial crisis.”
The only thing worse than being a taxpayer forced to bail out reckless banks is losing your job because it’s been outsourced or offshored. As Richard McCormack pointed out in the American Prospect, in the beginning of this century American companies stopped making the products Americans continued to buy, from clothing to computers. Manufacturers never emerged from the 2001 recession, which coincided with China’s entry into the World Trade Organization. Between 2001 and 2009 the U.S. lost 42,400 factories and manufacturing employment dropped to 11.7 million, a loss of 32 percent of all manufacturing jobs. The last time fewer than 12 million people worked in the manufacturing sector was in 1941
Europe has always had "universal banking" in which one bank does commercial banking, investment banking, and insurance. These allows European banks to do these sorts of transactions much more cheaply.
In the 1930's, this didn't matter to American banks because American banks were not in competition with Chinese or European banks over the same customers. However, in the 1970's technology made it easier for European banks to operate in the United States, and Americans to do banking in Europe. This meant that the small size of American banks started to be a disadvantage and Glass-Steagall was repealed to allow for the creation of American megabanks that could compete with Chinese & European ones.
To allow use to be able to trade with China as they entered the WTO. Glass Stegall didn't allow monetary manipulations as China practiced.
I tihnk it's a good thing, especially when it comes to China. They're the 800lb gorilla in the room. China is thinkng strategically and they intend to take everything they can get any way they can get it.
Sadly western capitalism isn't about strategy, it's about profits now and nothing else matters. We need to change how we do things or we'll get steamrolled.
My concern is that Trump took action with no preparation. None of his cabinet departments seemed to have any information about the announcement, there were no prepared statements or information to accompany the announcement and it almost seems like he pulled the percentages out of thin air. I dare say it looks like you did more research on the issue than the president.
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