Do you remember how we praised President Trump for the steel and aluminum tariffs?
We said it was a great news but we wanted to see how it played out at the WTO. President Trump initiated a process which would go through a number of steps before it holds up as policy. It turns out we aren’t going to even have to wait for a WTO ruling to expose this as a political gimmick:
“The White House formally announced late Thursday that six countries and members of the European Union (EU) would be temporarily exempt from President Trump’s tariffs on steel and aluminum imports.
Trump authorized an exemption for Argentina, Australia, Brazil, Canada, Mexico, South Korea and all 28 EU member countries while the U.S. negotiates long-term plans with foreign leaders from each country and the European body.
Trump will decide by May 1 whether to extend each exemption depending on the status of those talks, the White House said. …
The exemption applies to the top four exporters of steel to the United States – Canada, Brazil, South Korea and Mexico – which collectively account for about 50 percent of the steel imported into the U.S.
Trump announced earlier this month that the U.S. would impose tariffs of 25 percent on steel imports and 10 percent on aluminum in a measure that he argued would protect domestic workers and benefit U.S. companies.
The tariffs are set to go into effect on all other nations Friday that send their metals to the United States, including countries such as China, Russia, India and Turkey. …”
We don’t really import much steel directly from China which accounts for 2% to 4% of steel imports. It mostly comes through other countries. China sells raw and semi-finished steel to third party countries where it has value added and then it exported into the United States.
What does these steel and aluminum tariffs amount to when (so far, the list is growing) US allies like Canada, Mexico, South Korea, Brazil and the European Union are granted exemptions? It is just more election year political theater like the travel ban which now applies to countries like Chad, North Korea and Venezuela which don’t produce terrorists.
“… which now applies to countries like Chad, North Korea and Venezuela which don’t produce terrorists.”
But not to Saudi Arabia, Nigeria and Pakistan which do.
(I would personally add Israel to the list. Ask the people of the West Bank, Lebanon and Gaza.)
Everything about the Orange Buffoon is a gimmick. The Democrats have a golden opportunity to defeat the GOP cucks this year if they are willing to promote more traditional pro-labor candidates like Conor Lamb from PA’s 18th Congressional District.
Ok, I am as cynical as hell, but would they start a war to whip up patriotic fervor to win the midterms? If so, I doubt it would work this time.
The deeper reason for the tariffs is explained at my place:
https://buelahman.wordpress.com/2018/03/14/trump-tariffs-the-war-drums-are-beating/
Shit. I’m just reeling from that article.
So americans get a few higher paying slave jobs out of this where 80% goes for taxes of some sort anyway? This is not economic freedom foks.
The reason Chinese steel imports are low is because China is already subject to a number of countervailing and anti-dumping actions. The European Union has identical rules in place on Chinese steel. Without these rules Chinese steel imports would skyrocket in both the USA and the EU, as China has excess steel production capacity exceeding one-tenth its current production and this capacity exists in state-owned enterprises kept alive for political reasons.
These steel tariffs, neutered as they are, may still be helpful depending on the production capacity of the unsanctioned countries relative to the idle capacity in the United States (from memory, roughly one-third of current output).
The issue is not buried yet either–note the May 1 deadline. And Jean Claude Juncker has agreed in principle with Lightizer’s demand that EU steel exports to America be capped at current levels, which means demand growth will not be captured by European producers. The US steel and aluminum industries can further be expected to increase their competitiveness owing to lower energy costs in America compared to other major industrial regions.
The psychological factor must also be considered. Buyers don’t simply place orders based on current prices. Speaking as a consumer of finished metal products for my business, my vendors are very concerned about their source of supply and many are making arrangements to place orders with American steel companies.
And as Wallace noted with respect to finished goods, an issue with the steel and aluminum tariffs is that they make steel and aluminum consuming industries within America less competitive. An outcome of these tariffs could simply be that “virtual steel” imports (finished goods) increase and that the only major domestic production increase would be for the construction industry (rebar doesn’t end up in finished goods other than jersey barriers).
The tariffs should have been bundled with tariffs on finished goods. Trump threatened Europe with duties on cars if they retaliate. Logically we should’ve started with tariffs on cars, as that’s a finished good in which we’re competitive and have massive productive capacity. That said the USA now exports lots of cars (mainly German luxury SUVs made in South Carolina and Alabama; but also increasingly Teslas, pickup trucks, and Ford Mustangs) outside of the NAFTA area for the first time since before the war, so even this is a difficult question.
In other words do not black pill yet. This is a very complicated issue.
Good info.
Seems like Trump should be targeting nations that have a significant difference in labor costs for tariffs.
May have been better to start with fi she’s products first as you said.
How big is the annual US trade deficit, $700 billion? How much would it be reduced by Trump’s proposed tariffs? I am fully prepared to be underwhelmed.
2017 trade deficit was $800 billion.
https://www.trade.gov/steel/countries/pdfs/imports-us.pdf
Imports in 2017 were $2.25 trillion, so that means steel imports totaled $27 billion.
https://tradingeconomics.com/united-states/imports-of-bauxite-aluminum
Appears aluminum imports are about half of that.
Needless to say eliminating an $800 billion trade deficit is easier said than done and will take time. It doesn’t help that virtually the entire elite class believes the trade deficit isn’t a problem.