Trump's steel tariff


We are paying more for steel, that’s undeniable.

Just like we saw lumber prices climb.

Other countries react to what we do. They’re also promising to raise their own tariffs for other goods in response.

This is the same backlash the Smoot-Hawley tariff act precipitated in the '30s.

BTW, Steel is 10-20% the price tag of of our own equipment, that we export. So says, not an academic, but the President of the Association of Equipment Manufacturers. (AEM)

That’s uplifting intention before actual precedent.

All too often, temporary Government actions, become permanent fixtures in our policy.

We still have protectionist measures from the 30s in our Federal Register, so spare me ideas that Trump’s plan “will work”, when we already saw the evidence with lumber that it doesn’t.

The economy reacts the same way it has every other time crap like this has been tried.


“We saw lumber prices climb”?

Who is “We”? I just checked the soft lumber price at Home Depot and it is right where it was in February 2017 when I bought all the materials to replace the roof on my house; that was 13 months ago.

I expect you are using “We” in the context of people who don’t buy lumber but try to use selective snapshots in time for a price comparison which ignore every component that effects short term price fluctuations except the one which you want to condemn.

Protectionism would be blanket tariffs on commodities that you are trying to “protect”, not specific trade partners that make up a tiny percentage of the commodity that you import.

But I guess if you only have 2 boxes to check when discussing economics trade policy you don’t have much choice but to choose “Protectionism” when a tariff of any type is utilized.

Maybe in 25 years or so when Trumps approach is a matter of history someone in academia will finally understand it and write a new textbook that includes his strategy; then you will have another box to check!


RET, that’s just… No, Home Depot is a consumer store, with likely a whole backlog of supply it acquired months before prices increased.

When we instead look at prices for users who acquire their supply in realtime:

What I just posted above? Not a snapshot, what you tried to use as “evidence” however is.

RET? CANADA. The Tariff on lumber concerned Canada, our primary importing source of Lumber. Hence why they fired back with their own tariff on us. They are a “tiny percentage” for lumber, as much as Mexico is a “tiny percentage” for avocados.

Politics is BS in the realm of economics, and you know it.

Politics is about image, not substance.

That’s why we waste money on Dams & bridges we don’t need, create stimulus’ that do absolute ****, save big companies who deserve to fail, and socialize the risk of loans for foreign customers of Boeing.

Not because any of it makes economic sense, but because of image. That’s it.

And as I said RET, and as you cooly overlooked, subsidies do not equal a “win” for the country doing it.

That is a superficial examination of what subsidies do.

It is not in our interest to respond. It is not in our interest to slap tariffs. It hasn’t worked doing it to Canada, and it won’t work doing it to China. This is BS we’re going to keep around, because it’s good optics, not good economics.


That is the source of your error, you cannot seem to grasp that Trump is neither a politician nor an academic; he is a business man who understands how to use small fish to coerce whales.

But we can both put our money where our mouth is, like a bet where the loser makes a donation to the winners chosen charity.

I say these selective tariffs will not only not harm our Markets that consume these commodities but construction starts and demand for construction will rise at least double what they were when Obama was letting these countries do whatever they wanted.

If you’re right these Markets will contract from what they were in the “good 'ol Obama” days.

A smart investor will be buying real estate about now and the only increases in lumber and steel will be due to demand growing faster than suppliers can keep up.

Care to test your academic expertise against the real world economy?


They DO “equal a win” if they achieve what the subsidies are imposed to do–destroy their competition, which is PRECISELY why China subsidizes strategic materials sent to the U.S.


They don’t, not absolutely, because subsidies do nothing to affect quality.

When an industry is subsidized (or has tariff protection) you tend to insulate bad or less-than-ideal practices from their competition, so the industry has no compulsion to “update” itself.

American Steel has continued to exist through decades of Chinese subsidization, because most Chinese steel is low quality, and there are plenty of applications that need high-quality steel, not just the cheapest.

Chinese steel, at any price, will not be purchased for those applications. Like composites you put into aircraft, or industrial equipment.

Which means to survive, you do precisely what Germany did: aim higher up the value chain. If someone is crowding out the low or middle end, be the high end.

The end result? China may be the world’s factory, but nigh everything they produce, has to be made with tools made in Germany.


That’s a non sequitur. I wasn’t saying whether tariffs are good or bad, I was just explaining why domestic steel prices will go up when the tariff on foreign steel goes into effect.

I’m very sympathetic to that view. But there are two issues that make tariffs a reasonable consideration. One is unfair trade practice policies used by other nations. That’s not a free market, but foreign government action against us. Second is national security. Imagine if other countries were allowed to drive all of our steel mills out of business. We might at some point need to buy steel to build navy ships from a country that was planning military action against us.


It doesn’t matter; they’re hurting themselves by doing that.

Both subsidies and tariffs cause distortions in their own economy.

This is what New Zealand found out after it basically stopped subsidizing its agricultural sector, despite comprising 60% of their exports.

Their agricultural sector is more dynamic, and more sustainable than the Eurozone, despite the latter subsidizing their agro sector by some 20%.

New Zealand isn’t threatened, because they focused on being competitive, which economic evidence shows us is the proper emphasis. That’s what wins in economics; not artificial arrangements.


My earlier explanation of dumping shows a case where they do not hurt themselves. If they’re selling at cost to us, they’re bringing down their costs for domestic sales.

I think this bears some similarity to what @RET423 said.


Yes they do, as the economy runs on merit, not just cost.

Subsidizing the Collins Line in the 1850s, resulted in the U.S. taxpayer underwriting obsolete practices, and making the U.S. shipbuilding industry terribly wasteful and inefficient… if not for Vanderbilt, who made it a point to build ships & run the same routes as Collins competitively without those subsidies.

Subsidies weaken the host country, because you’ve now made things about political connections, not merit.

It weakens the impulse of your industry to adopt newer practices, and instead, to keep on continuing whatever practices it already has, and to push them to the limit of what those subsidies will allow (and then lobby Congress/powers at be for more money if you threaten bankruptcy).

Or worse yet, the industry tailors itself to whatever gets it those subsidies, and avoids doing anything else.
This is precisely what New Zealnd’s agrocultural sector was doing in the 1980s.

For Kiwi farmers in the 80’s, only the produce that got you a subsidy mattered. Virtually anything else they could be doing was overlooked.

Rent seeking is not a pretty business. Whether it’s grants or subsidies, it just creates distortions & waste.


Nonsense. China is doing what U.S. manufacturers did for decades–selling cheap, shoddy goods with a specific usable life–our ubiquitous “planned obsolescence” of bygone days. Because what they sell us is cheap, many believe that should be incentive enough for us to BUY it. What we SHOULD be demanding of our “trading partners” is goods that are not only “cheap”, but of superior quality. If they can’t produce it, then we should be making it ourselves. Japan kicked us in the pants over this issue back in the early 70’s by selling us automobiles that were fuel efficient and would run well for twice as long as American-made cars were designed to last. The result was that they gained so much AMERICAN cash that, at one point they BOUGHT the Pebble Beach Golf Course and tried to buy Rockefeller Center.

China, however, thinks in terms of centuries. They believe that if they can sell everyone subsidized steel and aluminum at a slight loss, it’ll be worth it for them in the long run when they drive other steel-produces out of the market…and it’s the U.S. that they are targeting.


And I already responded to this:


There are use cases, where cheap steel just won’t be adequate.

Boeing uses mostly U.S. steel & aluminum in aircraft, because that’s the material which is high quality enough to let their designs do what they can.

There’s plenty of industrial equipment out there that equally cannot make the tradeoff. Chinese steel is unusable to them, the cost does not matter, it’s the quality they’re looking for.

Chinese steel will only absorb market share, where quality doesn’t matter.

It can never put out of business steel manufactures, producing quality that sectors of our economy need.

I’m fine with enforcing standards… so why don’t we just do that, and forget about Tariffs?

If the steel is good enough, who cares where it comes from?

Denying use of cheap steel will only hurt our own exports; because everyone else will still be using it.


Just to reiterate.


From what I can see in this thread, @old_dog and I seem to be the only ones that think it’s unwise to depend on foreign powers for our supply of steel in time of war.

@Alaska_Slim presented Singapore as an example of a nation that’s not concerned, but in the very video presented, they admitted their military strategy is to make their country “like a poison prawn, unattractive for the bigger fish, the neighboring countries, to eat”. That may be good for a tiny, swallowable country like Singapore, but it doesn’t scale well.


I’ll come back to this thread to post later, but I’m reading the news and wondering if anyone here believes the news about Trump’s “bowling ball test” or if they believe it’s just another media lie. (every not conservative media outlet)

Does anyone believe he said this: “We lose money on trade, and we lose money on the military. We have right now 32,000 soldiers between North and South Korea. Let’s see what happens.” (redstate)

Or is that a lie?

Is this one a lie: Trump said he didn’t even want Japan to pay the tariffs but to build more automobiles in the United States, adding that Japan would do so if tariffs were imposed. (Washington Post)

All of these comments subvert the arguments for a steel tariff and underscore Trump’s supreme economic ignorance. These have nothing to do with national security, which has not really been threatened at all.


There are many items where I prefer low-quality disposability. I demand superior quality where I need or want it. I have little difficulty finding superior quality when I need or want it.

Those USB drives I buy from China, I dunno what superior quality looks like. They just work and work until I lose them. How would an American USB drive be better?

Well, yes, you torpedo your own comment. If quality is necessary, someone will supply it.

And yet, we have a thriving steel industry.

Who disagrees with you? But our steel industry is not at risk.

You can see clearly what the error is and where it came from. I’ve often wished I never made a mistake. But I make them in print time to time for everyone to see. Heck, I didn’t catch the philly writer’s error until later. I read it in as the stat previously mentioned. But don’t like the source, I get it – economic “truth be damned.”

Yeah, as I learned, we still have a strong vibrant and growing steel industry that is not threatened at all by foreign subsidies. It puts the lie to the keg producer’s claims for sure. The upshot is that this tariff is even stupider and more unnecessary than we previously believed, a solution in search of a problem.

It’s about as useful as rent-seeking lobbyists demanding regulation, subsidies and tariffs to protect their ailing industries. That includes steel.

And this justifies increasing taxes on U.S. citizens exercising their economic rights and trading with foreigners?

Except our use of our resources is not being threatened in the least.

We’ll see what happens. What other factors might hold those down? Relaxes regulation and tax decreases? The national housing something or other industry association, I’ll look up the name if you like, expected 6+ percent increases in prices. Maybe they’re like timber operators who claim Canada’s killed our industry – which outside my window is humming along very nicely right now.

Who has devastated our domestic resource industries? Who thinks we should?

Their subsidies hurt the foreign nations. It’s like giving us free stuff. if it were so effective, why don’t we embrace it?

Why do we want a government official to negotiate for us again?


Yes it does; Singapore can’t produce everything it needs to wage a war, it’s too small.

So it stockpiles.

We can do the same thing without manhandling our industries.

Again, the military uses 3% of what steel we produce, this isn’t beyond plausibility.

This isn’t about military threats, it’s just “economic nationalism”; skin deep analysis of how economies actually function.

With no reflection of how poorly these policies worked out in the past.


“Superior” to what?!! In my experience, the quality of yesteryear went the way of the dinosaurs!


Gotta respond to this: backlog of stock or not, consumer prices rise with wholesale prices, because the vendors have to include the additional cost of replacing stock, particularly high volume- low margin retailers like HD.

EDIT: That same logic applies at every step in the supply chain, from harvest/ manufacture to consumer: whenever the price of acquiring or maintaining inventory is pushed higher, the sale price on existing inventory has to rise to cover that additional cost.


No we don’t. Midwestern steel businesses have been disappearing by the dozens for the past 30 years. One such in California has ADMITTED that it’s cheaper for them to buy raw steel from the Far East than from the Midwest, EVEN taking into the account shipping costs across the Pacific.