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And manufacturers might lay off even more employees due to higher production costs. Economic policies aren't a vacuum.
Economic policies aren't a vacuum as you say. I agree. This is something that other nations understand very well but has escaped our own leaders for far too long.
When nations build up a steel industry, they are not just trying to make steel, they are hoping to create the vast manufacturing industries that use steel. Such as an auto industry. This is something that the Japanese, South Koreans and now the Chinese understand very well.
Like minded business tend to concentrate. There are many reasons for this. For instance, to cut down costs a business wants to be near its supply chain (when possible) or it wants to be in areas that attract large numbers of raw talent. For similar reasons, much of our banking and investment industry is in Manhattan and the entertainment industry is in Hollywood.
So the point is that this is not just about the USA trying to maintain steel and aluminum manufacturing. This is about maintaining or hopefully rebuilding the US auto industry, the US energy industry, the aerospace industry, construction equipment, shipbuilding, you name it.
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Quote:
Originally Posted by BentBow
The trade war started 25 years ago, when Glass-Stegall was dropped.
We have been on the losing end of that deal.
The sucking sound of jobs leaving America, happened fairly fast.
It began far more than 25 years ago. In the late '60s RCA manufactured vacuum tube parts in Harrison NJ, shipped them to Brazil to be assembled, then shipped them back to the US to be sold at the cost of jobs in NJ.
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.
And this is why we CANNOT COMPETE. We don't accept central fiat to support our industries, even if an issue of national security. Unless in times of actual War. Like WW2.
This is how he destabilizes OUR economy, making announcements that he is absolutely, positively going to one thing... and then does another.
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Like George W. Bush before him Trump has already backed down in terms of Europe.
The reason being that Bush was smart enough to recognise the damage retaliatory tariffs would cause, as the EU was going to hit states important to Bus with a large tax on oranges. The Orange Tax being very much targeted at the swing state of Florida, whilst Sugar was also seen as a good target in relation to Florida.
The same thing has happened again, with Trump backing down after the EU announced it would meely put large tariffs on selected American goods, namely agricultural produce such as Orange Juice, Peanuts, Bourbon Whiskey all from the South, as well as Cranberries and iconic brands such as Jack Daniels, Levi Jeans and Harley Davidson.
China will most likely hit back with a tarrifs on goods such as soybeans, a major US Crop of which over a third is exported to China, Cotton which will again hit the red states in the South and Cars, China being a major and increasing automobile market.
US reatailers don't want a trade war as it will lead to US goods such as steel products, clothing (cotton) and numerous other goods becoming more expensive, however the real casaulty will be the US Consumer and certain sectors of the US economy.
On November 11, 2003, the WTO came out against the steel tariffs, saying that they had not been imposed during a period of import surge—steel imports had actually dropped a bit during 2001 and 2002—and that the tariffs therefore were a violation of America's WTO tariff-rate commitments.
The ruling authorized more than $2 billion in sanctions, the largest penalty ever imposed by the WTO against a member state, if the United States did not quickly remove the tariffs.After receiving the verdict, Bush declared that he would preserve the tariffs.
In retaliation, the European Union threatened to counter with tariffs of its own on products ranging from Florida oranges to cars produced in Michigan, with each tariff calculated to likewise hurt the President in a key marginal state. The United States backed down and withdrew the tariffs on December 4. 2002 United States steel tariff - Wikipedia
Quote:
The Bush administration withdrew the tariffs in December 2003, about 21 months after they were imposed, but not without a cost.
The Consuming Industries Trade Action Coalition found that 200,000 workers in U.S. manufacturing lost their jobs as a result of the tariffs. For comparison, the entire U.S. steel industry employed 197,000 at the time.
Economic policies aren't a vacuum as you say. I agree. This is something that other nations understand very well but has escaped our own leaders for far too long.
When nations build up a steel industry, they are not just trying to make steel, they are hoping to create the vast manufacturing industries that use steel. Such as an auto industry. This is something that the Japanese, South Koreans and now the Chinese understand very well.
Like minded business tend to concentrate. There are many reasons for this. For instance, to cut down costs a business wants to be near its supply chain (when possible) or it wants to be in areas that attract large numbers of raw talent. For similar reasons, much of our banking and investment industry is in Manhattan and the entertainment industry is in Hollywood.
So the point is that this is not just about the USA trying to maintain steel and aluminum manufacturing. This is about maintaining or hopefully rebuilding the US auto industry, the US energy industry, the aerospace industry, construction equipment, shipbuilding, you name it.
There's a reason why Boeing was a big loser in the market yesterday. That trade needs to be addressed is valid.
Others speak for a shift in US policy from rampant free-trade, and that is worth considering. Implementing that shift cares for careful consideration, coalition building, skillful negotiation, and diligent enforcement. It is a process not an action. And certainly not a trade war.
Tariffs that lead to that trade war - among other drawbacks only undercut the supply networks now in place for US businesses.
Too, you are so right that steel making is first-stage industry. Trying to protect a first-stage industry (particularly with a tariff wall) is a losing proposition that wouldn't make the cut in well-designed longterm trade policy. It's never smart to fight the last war ignoring the battle ahead.
Perhaps it is finally time to consider applying approaches that fall under the "industrial policy" umbrella that we've always rejected. But THAT (effective economic policy) is not THIS (punitive tariffs).
That the US needs to address trade impact on workers is a related but somewhat separate issue.
it is an absolute fact that Trump has focused world attention on the issue. No question about that.
True, but the key is to work with the "world," specifically with other free-market economies to leverage their market power with ours to dictate or negotiate (pick your word) effective trade terms and enforcement.
Trade is not a zero sum game.
The other issue that is totally ignored in these threads is that "trade" is integrated with defense and foreign policy. That's just a historical reality - true for centuries, multiple countries/civilizations.
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.
All of what you write is spot on. There is excess world steel capacity created as other nations industrialized post ww2 and post-Mao. A lot of capacity was added in China over the last couple of decades during the building expansion. (At one point one-half of the world's construction cranes were said to be in Shanghai.) Chinese industrial policy has been effective - and does not meet spirit of the trade system created by the US after ww2. The Chinese joined the WTO, but continue to play by their rules not ours.
That steel is a first-stage industry does not mean that the US surrender its current steel industry - just not design trade policy around it or try to prop it up, which is an economically losing proposition.
You linked to the Obama-era steel tariffs. All "tariffs" are not equal. The tariffs described in these links are dumping tariffs, implemented under current WTO trade rules, very different from a punitive tariff war.
Sure, the Chinese may complain but it's just huffing and puffing, posturing for the press. What could be done is to where possible streamline our policies to make it easier for US industries to prove dumping before its own government that then results in automatic tariffs. Now ... it's a costly, drawn-out process.
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