Posted on 03/02/2018 6:13:39 AM PST by reaganaut1
Donald Trump made the biggest policy blunder of his Presidency Thursday by announcing that next week he’ll impose tariffs of 25% on imported steel and 10% on aluminum. This tax increase will punish American workers, invite retaliation that will harm U.S. exports, divide his political coalition at home, anger allies abroad, and undermine his tax and regulatory reforms. The Dow Jones Industrial Average fell 1.7% on the news, as investors absorbed the self-inflicted folly.
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The immediate impact will be to make the U.S. an island of high-priced steel and aluminum. The U.S. companies will raise their prices to nearly match the tariffs while snatching some market share. The additional profits will flow to executives in higher bonuses and shareholders, at least until the higher prices hurt their steel- and aluminum-using customers. Then U.S. steel and aluminum makers will be hurt as well.
Mr. Trump seems not to understand that steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.
Instead of importing steel to make goods in America, many companies will simply import the finished product made from cheaper steel or aluminum abroad. Mr. Trump fancies himself the savior of the U.S. auto industry, but he might note that Ford Motor shares fell 3% Thursday and GM’s fell 4%. U.S. Steel gained 5.8%. Mr. Trump has handed a giant gift to foreign car makers, which will now have a cost advantage over Detroit. How do you think that will play in Michigan in 2020?
(Excerpt) Read more at wsj.com ...
I am not so sure about this move, but I doubt this amounts to just a simple tariff. The effects are too far reaching. But we will see....
Of course the WSJ looters and moochers are for the current anti-USA trade deals.
I’m not a huge fan of the WSJ but on this one, they are right. This was a dreadful mistake.
Aluminum prices are increasing rapidly without tariffs. This will place pricing pressure on US manufacturers who compete with countries that have no tariffs on their raw materials.
My opinion is that instead of tariffs, he should be adopting policies intended to provide positive reinforcement of the manufacturing industry, capital investment, R&D, etc. The more you manufacture, the more steel and aluminum you use, and the more steel and aluminum you can sell. With the spread of industrial robots, we should be experiencing a manufacturing renaissance. Our high wage structure is not a hindrance when robotics do the expensive grunt work. He needs to tell industry to get with the program. The tech sector needs to jump-start the robotics industry. Then the manufacturers need to start using robots.
The problem with the WSJ is that they had no problem with George W. Bush’s spending and debt.
Yay, Tax Increase!?!?
He will get sued and lose, Republicans set up a system that has a mechanism to stop this, Democrats got tired of charging this windmill
Maybe he knows this and this is just for show
It's the existential split in the Republican Party and why they can't govern.
The WSJ is wrong on everything else, which taints their opinion when they are rarely right.
This presumes that US steel and foreign steel cost the same. They do not. That's the entire point of having a tariff, because your domestic product costs so much more to make.
I'm reflexively against tariffs, but that's no reason to mislead readers about them.
All my life I’ve felt it is wrong to allow other countries to place tariffs on our products but we don’t do the same to theirs. And it is a tax on the middle class only if you buy foreign made goods. ;)
If China doesn’t want us to apply a tariff to their stuff, they need to take tariffs off our stuff. Problem solved.
I’m willing to pay for that core value, even if it means higher prices.
In historical conflicts, it’s been said that he with the most steel wins.
I read the other day that the Chinese produce something like ten times the amount of steel the US does. (IIRC, the numbers were something like 810 million tons vs 80 million). China produces half the steel in the world.
The peaceful way to look at this, through the lens of microeconomics, is that they built up this huge capacity because of their manufacturing and because of their incredible urban expansion. Then, you look at the plants themselves, and although some may be inefficient, it may be better to manufacture and dump steel than to leave them depreciating and idle.
The non-peaceful way to look at it is “Guns and Steel.”
The tariffs will motivate some steel capacity expansion in the US, but it isn’t going to close the production gap all that significantly. Maybe it is aimed at halting the atrophy of our steel and aluminum making industries... as a defense measure more than a trade measure.
All speculative on my part. I don’t sit at the decision table.
Yeah, Ford motor with their aluminum body F-series pickup.
This is one of the worst things Trump could do for the economy. Mexico is smiling because they'll ship more cars and appliances to the U.S. The Middle East Oil Sheiks are smiling because the domestic oil industry just got less competitive (steel is a huge input). Gold hoarders are smiling because inflation is on the way. Dems are smiling because this is the type of policy they love, but aren't dumb enough to enact. They're also looking at a sweep once the economic impact hits.
Combine this with his gun control and you can understand why so many conservatives were uncomfortable with him.
I agree the field is already uneven and unfair. Besides this should not be a surprise as he said he was going to do it.
I have no doubts that Trump knows what he’s doing and that it’s the right thing to do for MAGA.
Raw steel and Aluminum need to be produced in the U.S in at least a modest quantity in order to keep up with the Industry and have a ready base to expand in the event we do need to expand.
Trump used a national security angle. Let’s see what happens.
I am not certain this is a great idea, but I’m certain Trump will use it as a point of leverage in individual trade negotiations.
He now has something they do not like and would like to end. To do so, will require them giving up something.
Trump created a crisis for Demonrats regarding DACA by ending the program. It brought Demonrats to talks.
He is threatening to end NAFTA to bring Mexico and Canada to the table. Canada is hit with this Tariff on steel and aluminum... and has more incentive to strike a deal on NAFTA that is favorable to our interests.
Always risks, but Trump seems to weigh those - indeed, be more aware of them than others. I see this in a broader way than creating tariffs only and a trade war.
I would not be surprised if Trump communicated to Canada’s Dancing Trudeau and with China before they were put on n place.
Time will tell.
But on the other hand, if we are in economic competition with Red China, and they sell commodities on the open market at a loss in order to drive our factories to shutter and garner market share, then tariffs will blunt their efforts. No?
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