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RedStickBR
LSU Fan
Member since Sep 2009
12975 posts

Commerce Department Reports on Steel and Aluminum Imports
These reports form part of the basis for the recently announced tariffs. This issue is tricky. On the one hand, I tend to be opposed to tariffs when they are only meant to prop up an otherwise uncompetitive American industry with the industry of a foreign country who is competing fairly. Tariffs in that case would unnecessarily raise prices for consumers and reduce productivity.

However, tariffs may be necessary when they are placed on items that are inputs into the weapons of war (arguably the case for steel and aluminum). If the U.S. goes to war with China, it would be unfortunate to have to rely on China for the steel and aluminum we need to build tanks, planes, etc.

Moreover, when a foreign power is dumping goods on U.S. markets, it is true that this benefits American consumers short-term (buying goods that are priced artificially low). But if this causes the foreign power to have a monopoly on the production of said good, that would likely have disastrous consequences on domestic prices long-term.

It seems at least both of the arguments FOR tariffs in certain narrow instances could be legitimately at play here. China's excess capacity of steel production alone is greater than the U.S.' total production. Do we need to take steps to keep this industry alive in the U.S. - what say the PB?

LINK


LSUTigersVCURams
LSU Fan
"O" The Rosy Finch Boyz, LLC
Member since Jul 2014
19243 posts

re: Commerce Department Reports on Steel and Aluminum Imports
What's been happening with steel in this country and with a lot of other things has been a disgrace, and we're not going to do it anymore folks. We have to have free trade, but wr have to have fair trade.

- TRUMP. HAIL TRUMP!


cahoots
LSU Fan
Red Stick
Member since Jan 2009
5971 posts

re: Commerce Department Reports on Steel and Aluminum Imports
Dude, we are getting a small % of our aluminum and steel from China. China is consuming something like 80% of its production. And if we were really concerned about it, we'd levy a tariff on China, not everyone else too.

It makes no sense at all.
This post was edited on 3/4 at 11:52 am


JuiceTerry
West Virginia Fan
Roond the Scheme
Member since Apr 2013
36259 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

If the U.S. goes to war with China, it would be unfortunate to have to rely on China for the steel and aluminum we need to build tanks, planes, etc.

The Chinese bogeyman again

We don't import much steel from China relative to other countries


Lou Pai
Houston Astros Fan
Member since Dec 2014
16287 posts

re: Commerce Department Reports on Steel and Aluminum Imports
I don't know what lead times are, in going from zero to full utilization on military grade steel production, but I would suspect we could ramp up very quickly to meet military demand. I am largely skeptical of the national security angle.


cahoots
LSU Fan
Red Stick
Member since Jan 2009
5971 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

I don't know what lead times are, in going from zero to full utilization on military grade steel production, but I would suspect we could ramp up very quickly to meet military demand. I am largely skeptical of the national security angle.


I would argue that this tariff is actually counterproductive in war times. Our largest trading partner is one of our closest allies - Canada. China is way down on the list. And the cost of steel is going to rise, not fall.
This post was edited on 3/4 at 11:58 am


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culsutiger
Member since Apr 2012
652 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

Dude, we are getting a small % of our aluminum and steel from China. China is consuming something like 80% of its production.


China consumes 80% of its production for end use in China?

Or China consumes 80% of its production much of which is used for products and components that then get exported to the US?


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RedStickBR
LSU Fan
Member since Sep 2009
12975 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

Dude, we are getting a small % of our aluminum and steel from China.


Which would argue in favor of being against these tariffs if you are considering them on the grounds I listed (which were meant to mirror the Commerce Department'a concerns). As mentioned in my preface, I tend to be against tariffs. I am only wondering if anyone can make the case for this being a case of "Yes, but ..."


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LSURussian
LSU Fan
Member since Feb 2005
108247 posts
 Online 

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

it would be unfortunate to have to rely on China for the steel and aluminum we need to build tanks, planes, etc.

We don't rely upon China for our steel or aluminum. At least not for any significant amount.

And if we have a hot war with China, I don't think tanks will be major components of the fighting.

One way to avoid war is to have the adversaries economically dependent upon each other.

One way to start a war is to make one country's population suffer as a result of the other country's trade policies.

That's what led to Japan bombing Pearl Harbor.


RedStickBR
LSU Fan
Member since Sep 2009
12975 posts

re: Commerce Department Reports on Steel and Aluminum Imports
All fair points. This policy is just so uncharacteristically stupid for an administration who’s scored well to date on economic issues, I’m at a loss for legitimate reasons in support of it. There may in fact not be any.


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WildTchoupitoulas
Oscillating Fan
Member since Jan 2010
29736 posts
 Online 

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

We don't rely upon China for our steel or aluminum. At least not for any significant amount.

And if we have a hot war with China, I don't think tanks will be major components of the fighting.

One way to avoid war is to have the adversaries economically dependent upon each other.

One way to start a war is to make one country's population suffer as a result of the other country's trade policies.

That's what led to Japan bombing Pearl Harbor.


Excellent post.


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TeLeFaWx
SMU Fan
Dallas, TX
Member since Aug 2011
24060 posts

re: Commerce Department Reports on Steel and Aluminum Imports
Tariffs on semiconductors in the late 80a is a perfect example of the instances why some tariffs work. Dumping cheap products is pointless and a net negative. It's added waste on every level. Adam Smith is the Father of Capitalism, but Ludwig von Mises and his book Socialism get in to the basis of why pricing is so important. Pricing is the basis for the proper allocation of resources. If you manipulate that, no matter how you do it, you're creating added waste. Beyond that, effecient and responsive pricing mechanism are best in competitive industries. Substitute goods and competitors are incredibly important. Taxes create deadweight loss. Deadweight loss is bad. You know what else creates deadweight loss? Monopolies. If China is a monopoly in anything, it's bad. It definitely benefits them, and their protectionist policies have helped them average 10% growth for decades. But is this steel issue an instance of something we should fight back on? Probably not. This will hurt relations with Canada more than anything.

It's also not as big of a deal as everyone thinks it is. Slightly more expensive steel won't send us in to a death spiral. It's like people forgot they were paying double for gas at the pump for years and the world kept moving. I'm not with the God-Emperor on this, but the sky is falling attitude is ludicrous.


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Iowa Golfer
Iowa Fan
Heaven
Member since Dec 2013
9332 posts

re: Commerce Department Reports on Steel and Aluminum Imports
Which tariffs are you asking me to weigh in on? Specifically?

Or are you asking me to think like the media, and weigh in on some Twitter strategy?

I'm happy to weigh in on tariffs if any ever get seriously proposed.

While everyone is distracted by this, the federal judiciary is quietly being remade by appointment of very young conservatives judges. No big deal, probably won't have any impact on an entire generation.

I'd better concentrate on Twitter. And Russia.


TeLeFaWx
SMU Fan
Dallas, TX
Member since Aug 2011
24060 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

While everyone is distracted by this, the federal judiciary is quietly being remade by appointment of very young conservatives judges. No big deal, probably won't have any impact on an entire generation.

I'd better concentrate on Twitter. And Russia.


I am a big fan of Trump Derangement Syndrome and how it's caused liberals to lose their minds and absolutely lose the plot. Even if it means the tiny amount of conservative media falls victim as well. These tariffs won't be the end of the world and whatever negative impacts they have are easily navigable. The positives in this first year with the tax code alone offset 50 tariffs much less one.


Iowa Golfer
Iowa Fan
Heaven
Member since Dec 2013
9332 posts

re: Commerce Department Reports on Steel and Aluminum Imports
Yes. I mean sometimes the devil is in the details, but never at the expense of the big picture.

FWIW, the remake of the federal judiciary, even if Trump accomplishes nothing else, already guarantees his Presidential legacy will be superior, and longer lasting than the last 4-5 President's combined.

My opinion, and my instinct. Everyone will know for sure in another 15-20 years. Some of us already know.


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Jokey1968
Georgia Fan
In a house
Member since Oct 2015
260 posts

re: Commerce Department Reports on Steel and Aluminum Imports
Could you elaborate more on Japan, Pearl Harbor?

Being serious.


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Humanelement
LSU Fan
Baton Rouge
Member since Sep 2015
1366 posts

re: Commerce Department Reports on Steel and Aluminum Imports
Simply not true. We get upward of 50% of our still from China, and now their not just pumping raw steel into the US, but along with South Korea, South Africa and a few other small countries they are-using Chinese steel to fabricate pipe,structural steel and large process modules that go into construction in our plant expansions here in the US, making their market share even higher, all the while our industries are cut off from their markets. Absolutely had to be done if you want to save our construction industry here in the states
This post was edited on 3/4 at 1:04 pm


TeLeFaWx
SMU Fan
Dallas, TX
Member since Aug 2011
24060 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

Simply not true. We get upward of 50% of our still from China, and now their not just pumping raw steel into the US, but along with South Korea, South Africa and a few other small countries they are-using Chinese steel to fabricate pipe,structural steel and large process modules that go into construction in our plant expansions here in the US, making their market share even higher, all the while our industries are cut off from their markets. Absolutely had to be done if you want to save our construction industry here in the states


Everything is fine til the very end. Jumping to hyperbole is something only the Left should have to resort to because they are running on feelings not facts.

China's protectionism worked for them. That doesn't make protectionism an absolute winning strategy for us, or anyone else. In 1981, almost 90% of China lived below the poverty level. Now it's only 6%. They've averaged 10% growth for decades. When your country is dirt poor, has no infrastructure, no industry, and massive amounts of resources; overproduction can fastforward you to where you would get to anyways.

Let's take a step back and look at the Japanese semiconductor example because it's probably a perfect case study for strategic tariffs and how fair pricing truly is the best mechanism for the efficient allocation of resources. Pricing isn't about making one good "cheaper". The concept of "cheaper" is a massive conflation. Goods should cost what they should cost, if the most efficient actors are producing them. If they are over producing or under producing, then that added consumer surplus from something being "cheaper" has a consequence somewhere else. The global semiconductor market is currently over 50% produced in the US. The US has had that claim for the entire history of the existence of semiconductors, except the 5 years Japan flooded the market. This is bad for multiple reasons. Sure, it made components of products cheaper, but it's a net negative. Less quality components, wasted shipping. Wasted fuel. Wasted resources. So to those that saying, "if China wants to make our steel cheaper for us, let them" don't fundamentally understand the efficient allocation of resources in the free market. China shipping steel they don't need to produce is wasteful. From wasted boats that could be used to ship other goods and services we need, to you know, getting those billion people to actually work on other goods and services we want and need. Their resources used to make steel are wasted. Our use of steel is also wasted as we undermine competing goods. Letting prices rise to their fair market price should be embraced, just like in the semiconductor market. Japan was not the best producers of semiconductors. They were dumb to do it, and while it made our products cheaper temporarily, it held back the global market. While this is a hyperbolic hypothetical, what if Japan controlling the market with cheaper, but inferior components, delayed personal computer home adoption by 6 months? Think of all the extra wealth that could have been generated in the 90s if we were 6 months ahead of where we were.

Look, there are arguments to be made for fair trade and reciprocal trade. There is even a bigger argument to be made that China undermining the global steel industry by dumping cheap steel on countries is a net negative on many levels. I would even make that argument. Specifically with steel we waste time and resources sending steel BACK to China because the quality is so low... Yet it's still cheaper. The waste is obvious on a ton of levels.

Don't make your argument about one set of jobs or "saving an industry". Make it about making them play fair, as when they play fair, everything falls in to line.


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Clames
LSU Fan
Member since Oct 2010
8488 posts

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

We get upward of 50% of our still from China, and now their not just pumping raw steel into the US, but along with South Korea


This. So many here are grossly ignorant of China's habit of dumping cheap raw steels on same the countries we import finished and semi-finished steel products from. Canada, South Korea, and Brazil all have China has the top importer of their steel and those three are our top suppliers of steel products. Even Brazil slapped China with a tax for dumping cheap steel products several years ago. China produces raw steel cheaply by being subsidized and without being limited by environmental regulations of their government. So a country like Brazil or South Korea will buy processed steel that is cheaper per ton rather than mining and smelting their own ore or importing raw ore. China has been dumping steel on foreign markets for years and this tariff easily punishes China and probably more effectively than most here imagine.


90proofprofessional
LSU Fan
Member since Mar 2004
20735 posts
 Online 

re: Commerce Department Reports on Steel and Aluminum Imports
quote:

If the U.S. goes to war with China, it would be unfortunate to have to rely on China for the steel and aluminum we need to build tanks, planes, etc.

It probably would. Of course, less than 10% of our aluminum imports (and far less than 10% of our total aluminum consumed) comes from China. For steel, it's less than 2% of our imports.

On the bright side, look at all the other exporters who supply much more of those items to us, and feel good about the fact that we have solid relationships with most of them.

Probably would be a bad idea to do anything that might jeopardize that trade relationship though.
quote:

But if this causes the foreign power to have a monopoly on the production of said good, that would likely have disastrous consequences

See above.
quote:

It seems at least both of the arguments FOR tariffs in certain narrow instances could be legitimately at play here.

Neither of those arguments are in fact the case here, and even if they were, they wouldn't justify the President & Commerce Secretary's announcement of across-the-board tariffs.


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