... but I guess not.
I don't know about you, but when I heard Trump rattling sabers about tariffs and trade wars, I saw it as the typical Trumpian gambit. You make huge pronouncements and then see what happens. Time after time, he starts the bidding way beyond what he really wants and then negotiates his way back to the win he is willing to accept. I'm pretty much a free-trade guy, but I didn't get alarmed by the president's tough talk at all. I figured someone in the media would have it dialed in and urge calm.
Nope. We were headed for a massive trade war, possibly followed by a shooting war. Sigh. It's all so much Pavlovian salivation on the part of the press. DOOM! DOOM! HE'S TOTALLY CRAZY!
Meanwhile, employment is roaring, stocks are recapturing their lost ground, Rocket Man is offering to meet with President Trump after pausing his missile and nuke tests, ISIS has been totally wiped out and on and on. Every move he makes is going to kill us, except for the ones that make us wealthier and safer. Which would be all of them.
3 comments:
And he didn't even say "I want tariffs," he said he wanted tariffs on those countries that put tariffs on OUR stuff.
Which just totally underlines the "THIS IS A BARGAINING CHIP" flashing neon light.
Exactly. He has said over and over free trade, but fair trade. So if you don’t tariff, we don’t. If you do, we do. Or “we will enforce the golden rule”. So simple a child can understand it.
My problem with Trump and his talk about tariffs is this: I work with the steel industry. I was just visiting a blast furnace operation in Indiana last month, and I was talking with a lot of people in the industry at a technical conference just a couple of weeks ago. And I wasn't hearing any particular muttering about steel dumping. They were just proceeding more or less as usual, making long-term plans based on the conditions they expected.
And then he comes in and kicks over the applecart. Now nobody knows what is going to happen, everyone's plans are getting rearranged, and I personally think that some of the decisions being made in the industry right now are going to turn out to be major mistakes, particularly if it does turn out to be just a bargaining chip and he ends up not imposing tariffs after all.
The big issue is that the industry has gradually been moving away from the blast furnace towards a combination of electric arc-furnace minimills, and direct-reduced iron. About 68% of the steel produced in the US is made in the minimills. But, the feed for the minimills is metallic iron, either scrap, or direct-reduced iron. Currently a lot of this comes from overseas, and so these minimills would have their feedstock costs increased by tariffs. This would force us back towards the increasingly-obsolete blast furnaces, rather than moving forward to better technologies. The US steel industry needs to move away from the blast furnaces. I'm evidently only allowed 4096 characters here, but I could go on at great length about how the characteristics of the blast furnace are strangling the steel industry. We don't need tariffs to protect the integrated mills and their massive blast furnaces, we need to move on to new technologies that will keep us competitive enough that the tariffs will be unnecessary.
I don't like having my industry turned into a political football. Steelmaking is not a Republican, Democrat, Liberal, or Conservative issue, it's just a way to make a living. I just want them to leave us alone so we can sort things out. Is that too much to ask?
Post a Comment