Posted on 02/20/2018 5:01:29 AM PST by reaganaut1
The economy is picking up steam, but President Trump could reduce the benefits of his tax cuts and regulatory rollback with protectionism. This risk became more serious after the Commerce Department on Friday recommended broad restrictions on aluminum and steel imports that would punish American businesses and consumers.
Last year the President directed Commerce Secretary Wilbur Ross to investigate whether steel and aluminum imports threaten national security under Section 232 of the Trade Expansion Act of 1962. Commerce concluded that they do and has proposed quota and tariff options to mitigate the putative harm. But the evidence in Commerce’s reports belies this conclusion. And the wide-ranging economic damage from restricting imports would overwhelm the narrow benefits to U.S. steel and aluminum makers.
Start with national security, which Commerce construes broadly to include “economic welfare.” There’s little risk that the U.S. couldn’t procure sufficient steel and aluminum for defense even during a war. Defense consumes 3% of U.S.-made steel and about one-fifth of high-purity aluminum. U.S. steel mills last year operated at 72% of capacity while aluminum smelters ran at 39%. Both have ample slack to raise production for defense and commercial demands.
Commerce says only one of five aluminum smelters in the U.S. produces the high-purity metal required in defense applications. “Should this one U.S. smelter close, the U.S. would be left without an adequate domestic supplier for key national security needs,” the report says. But Commerce also notes that “Canada, which is highly integrated with the U.S. defense industrial base and considered a reliable supplier, is the leading source of imports.”
(Excerpt) Read more at wsj.com ...
The WSJ has joined the deep state / open birders cabal. Too bad - it was once a great paper.
In 2007/2008, the price of steel skyrocketed by as much as 80%. That is almost double. When building an 800K SF factory, this drives the whole price of the facility up by almost 40%. It's a big hit!
In that case, the price increase was driven by demand in Asia (mostly Russia). I can't say this will increase prices THAT much. But the price of steel was a contributor (albeit small) to the economic nose dive we took in 2008/2009. The construction industry came to a screeching halt and a lot of jobs were lost.
Free traitor much?
“Commerce says only one of five aluminum smelters in the U.S. produces the high-purity metal required in defense applications.
Could there be a reason for this?”
Try getting a permit, lately, to open a new one. Try dealing with the unions, EPA, and the yocals. Imports, and the inability to be competitive on the world market is a SYMPTOM of us killing ourselves - it is not the cause.
But we can fix it - by reigning in labor unions and ‘common sense regulation reform’, the second of which Trump is obviously doing his best at, and the Supreme Court will hopefully weaken unions significantly in June (even though that case is public sector unions, it will spill over).
Who? China? Japan? India?
I agree that this could prompt a new push for more steel production in the US. But the EPA Regs need to be cut WAY DOWN, among others. We do not have the factories in place today to compete globally in the steel market.
Maybe now is the right time to make this move, for the good of the future. I just don't want it to slow the growth of our economy.
General tariffs are a tax. To place general tariffs is to raise taxes.
To a degree increasing, Chinese steel is market regulated by quality considerations. Manufacturers refuse to purchase Chinese steel.
“Maybe now is the right time to make this move, for the good of the future. I just don’t want it to slow the growth of our economy.”
—
I understand the concern. If there were some kind of a switch that kicked in when it would be a good time to start - specifics as to the conditions, then waiting would be a good idea. Otherwise, I’m of the mind the best time to start is ASAP.
The WSJ is not to be trusted PERIOD!
You know what? I saw this comment and didn't even bother to see what you were responding too. This BS is unbecoming of a FReeper. Your "Free traitor much" is EXACTLY what liberal do. No idea, no debate, no discussion of facts or logical opinion, no effort to sway an opinion with intellect. NOPE. You go to obnoxious and childish, emotional, liberal name calling.
You lost this argument and I don't even care to check what it is you object to. Liberals are stupid. Don't use liberal style tactics here. It makes you look stupid.
(Sorry to be blunt)
What is your alternative? Prices are already going up. Plywood and lumber have skyrocketed in the last 5 years with no tariffs. We can’t control prices. In a free market economy prices seek their own level based on willing buyer willing seller.
What we can do is make sure the American companies get the best deal in America by protecting them from competition by companies that pay their workers in fish heads and have no costs from pollution and safety regulations. There is nothing wrong with that and a great deal right.
Foreign companies are free to come in and start factories & employ American workers. They are doing just that. If the tariffs on raw materials are no longer needed they can be adjusted.
It seems you are not factoring in the flexibility that is being contemplated. Other Nations have quotas before tariffs are applied. Favored Nations can have higher quotas. This gloom and doom scenario is not realistic.
The globalist, open borders WSJ is full of sh*t. They could care less about American workers and their jobs.
We do have tariffs on Lumber from Canada. I don’t know much about it, but that could contribute to the cost of lumber. This would confuse me too because we produce a lot of lumber in the US (maybe not as much as Canada).
Here is what I would like to see (before steel tariffs):
Like we did with “Big Oil” after the “Oil Crisis”, incentivise the industry expansion with BIG tax credits, deductions, etc. for new manufacturing. Give the program a 20 year sunset. Give existing manufacturing companies 50% of what start ups get in tax avoidance programs. This incentivises their expansion and hopefully gives them some capital to invest in expansion. Hopefully, this would jump start some investment in the industry and get some capital moving in from all over (including China, Japan and India). Then, 5 years into that program, start talking tariffs to further energize the growth. Higher steel prices (high profits and returns) will certainly excite investors. As long as the prices to spike, then the economy could absorb the cost and hopefully would plane out in 20 to 30 years.
You likely have a point about the flexibility. I got stung pretty bad in 2007/2008 with the economy and steel prices. Maybe I’m a bit gun shy. ;o)
We just put tariffs on washing machines to help domestic producers. Now we are going to put tariffs on the steel and aluminum they use, taking away any cost advantage they had against imports.
Bush implemented steel tariffs....
FYI... 2 billion dollars of cheap aluminum imported into the US would have put any remaining domestic producers out of business.
1.6 million tons of Chinese aluminum was stockpiled in Mexico.
We’ll see
WSJ and so called pundits have been wrong at every turn. Plus there is no reason that needed materials should ever come from our enemies
The WSJ doesn’t give a crap about the average American worker.
The WSJ was given one of three options. Instead of ranking them it decided that all three were bad. Most unhelpful, but the journal is not to be trusted either when it comes to economics or politics.
The cost of materials is only one of the costs associated with manufacture and it is doubtful that a rise in commodity prices will erase the domestic cost advantage completely.
Lets remain objective and wait and see how this new tariff plays out before criticizing the decision.
Because it is getting harder to harvest lumber, and customer pressure to stop using lumber is increasing.
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