He actually makes a pretty good point (if you put emphasis on the word “can”) that not enough people are noting: it’s almost too obvious that Trump is just bluffing. Besides the haphazard rollout, did anybody actually watch and listen to him announce it? You could tell he wasn’t familiar enough with the details for it to be a concrete thing that anybody there has even fully considered.
Good question, and not sure Trump ever really explained (coherently) what he expects to get out of tariffs.
But the decline of American still is what it is, and frankly, Trump is 30-40 years (or more) too late to the problem. People assume that China is somehow playing a dirty game with their steel production, and in some ways they are: they’ve been able to produce and market steel cheaply for years, though in recent years, their own costs have risen.
What people advocating a trade war with China and other countries over steel of all things are missing is that Asian countries aren’t just producing steel, but also making it as well. They use the steel they make. They also sell steel to importers, with the US being the largest importer of steel on the planet. American businesses, making cold, hard business decisions, have decided in recent years that it’s cheaper to buy steel already made than it is to make our own and sell it here. Trump’s steel gambit, if he has the political will to sustain the economic pain that comes with it, might help boost steel production…a little. But we as a country made a decision over 2 generations to get out of the steel game. It’s not as easy as just slapping on a tariff and getting back in.
In the meantime, other countries are going to attack us where our economic advantages and strengths really lie. It would start out small, with things like clothing and whiskey. And then it would get progressively bigger with companies and industries that employ you or your neighbors.
Actually, you’ll now be paying $11 per pound for the American steel as well, because $11 is the floor price for the competition, and why would an American manufacturer pass up an extra $1 of profit when a competitor can’t go any lower.
Good points, all. I seriously doubt Trump has a rational reason for this. Hell, he might not have any actual reason for this aside from causing chaos, attempting to intimidate other countries into giving the US a better deal (as if we don’t already tweak things to get a good deal with our current trade agreements) or playing to the populists and idiots.
Because they would sell more at a lower price?
No, what happens is that the US manufacturer puts prices up to $11.
Then spend some of that windfall profit courtesy of the US taxpayer to extol the merits of tariff policy for maintaining jobs for good ol’ US blue collar workers.
The actual quantity of steel sold goes down as steel is less affordable and the American market share doesn’t change. The US manufacturer likely becomes more profitable as they need less workers/overtime as they have excess capacity so employment falls and the US taxpayer gets screwed.
Conversely the Chinese manufacturers are selling about the same amount of steel for the same price and are barely impacted by the trade war.
I’ll just note that a subsidizing an industry is effectively the same practice (e.g., our corn fields), it just slides around the monetary pressure (in the hydrodynamic sense) to a different set of pipes, but that probably all balances out about the same in the end.
Well, Christ, I would hope that’s the case, since they’re producing it and all. 
I like reading my own guffaws from time to time.
Anyway, carry on.
I guess to keep banging on an old theme, it’s a part of a new national ideology that is premised on anti-globalism. It’s consistent with his threats to withdraw from international obligations and accords altogether: NAFTA, TPP, NATO, Paris…
And again, if there’s one entity that richly benefits from this, it’s Putin’s Russia. Not directly in terms of the global steel market (although Russia does, in fact, produce its own steel), but more so in terms of helping America make itself less trustworthy among its international counterparts.
The U.S. is still the leading producer of Rearden Metal.
That’s a real thing, right?
Only if there is a single American producer or price collusion. Assuming multiple American actors, their competition with each other will still put downward pressure on prices. Although it does change the supply curve unless American production can ramp up quickly and significantly.
No. The “price collusion” in this scenario is the US government’s trade policy has raised the price of steel.
Manufacturers will follow the price signal unbidden because it’s a metric shedload easier to increase profit by raising the price on current production than seeking that same profit boost through investment and production of more steel and placing increased volumes in the same market. It’s true for one manufacturer and it holds for the industry. Any industry.
As noted, there are very specific definitions on what constitutes dumping and WTO rules allow punitive tariffs to be applied on dumped goods without instigating a trade war.
If these materials were being dumped on the US market within nanoseconds every US steel industry trade attorney would be all over it like seagulls over a chip.
They’re not.
It’s a Miracle.
The thing that folks seem to miss here is that, just as Trump knows more than all the generals, he also knows more than all the economists. So, not to worry!
Which means exactly nothing to foreign powers imposing reactive, punitive tariffs in other industries.
Policies that make it harder or more expensive for American companies to use steel and aluminum, might result in certain things being replaced with polymer. It might be a good time to buy stock in companies that produce composite materials and polymers.
A lot of the discussion so far has been around how these tariffs would affect Chinese steel, but from what I have heard, Europe exports far more steel to the U.S. than China does. Hence, the big freak out and promises of retaliation today have been coming from Europe. That may be another reason it’s hard to win a trade war: you end up damaging your “friends”, not just your “enemies”.
You guys know that China isn’t even in the top ten of U.S. steel importers, right? From what I see, definitely less than 2% of steel imports if that.
Yeah, if I’m honest, I don’t really see what motive Trump had to do this. If we imported steel from China, I could see it, but they aren’t even in the top 10 and even within the top 10 we don’t strongly favor one country over another (PDF). It’s unclear who, exactly, this is meant to target.
With his “let’s snatch the guns!” and now this, I feel like he’s going into meltdown mode again. (People forget how much worse Trump was before John Kelly took over babysitting duty.) At best, maaaaybe this is a reaction to the Mexican President refusing to pay for the wall? But I think we can call this the “my daughter’s husband is going to jail and I lost my sugarbaby” trade war.
My understanding is proving dumping is not easy. What if the lower prices arise from the government subsidizing the business? Or even subsidizing ancillary businesses? If the government builds a dam nearby to provide cheap power and water is that a subsidy? If they provide food stamps so workers can get by on lower wages is that a subsidy? Where do you draw the line and say it is an unfair trade practice?