Steel prices - Yikes!

[Ford850]

So where does the tariff money go? This extra money that we are paying because there is a tariff on part/all of the item? It goes directly into the Treasury. Let's call it what it really is...a TAX.

Sure it does, since the meaning of "tariff" is a tax on imports. I don't think anyone is trying to hide that fact. Rather than say "tax on imported goods" we can use the word "tariff".

 

[rd_macgregor]

Oh and trade prevents war. It just does.

I wondered if anybody would bring this point to the fore. Trade is a prominent tool in foreign policy. In the past, it has most often been used to build economic interdependency bridges that help buffer possible conflicts. At the same time, raising the economic wellbeing of less developed countries helps stabilize them in the socio-political sense.
A lot of manufacturing job losses in recent decades have come from automation, a trend that is likely to continue. Automation has been abetted by technological advances (eg robotics), but also impelled by high labor costs; manufacturers find robotic technologies now cheaper, more productive and more reliable (and less of a management hassle!) than labor. While cheap labor drove competitiveness of Asian manufacturers for decades, now many of the more advanced countries supplying us with our manufactured goods have also moved into robotics in a big way...my Kioti is an example...and by coming late to the game, often built efficient, state-of-the-art mills, refineries and factories while US counterparts were slow to upgrade 50's tech.
Having said all that, it is also only fair to say countries sometimes don't play fair. Currency manipulation is a favorite tactic, as is state-sponsored dumping. These countries are all doing the self-centered thing; each is applying a "*******"-first policy...this is part of the bigger picture. Being the biggest of the 500 lb gorillas in the game, the US just has a lot of clout when it strives for advantage.

I had to chuckle at comments, above, favoring the erection of tariff barriers to protect American industries (and as touted by the current US administration). Interestingly, one of the two main sticking points in the current renegotiation of NAFTA between Canada and the US is Canada's supply management system, which (for about 50 years) has used tariffs to protect the Canadian dairy and poultry sectors from foreign competition; the US wants those barriers removed. What's good for the goose...

 

[hawkeye08]

Tariffs are not the end game, free fair trade is. Tariffs are used to change behavior. The US has been propping up other countries for decades. Let us compete fairly on world markets and you will see US grow and innovate. I expect Canada will come around eventually, Mexico got a great deal. It will take more time for China to change directions, they have taken advantage of the US for decades.

I have some projects pending and am cringing at finding out how much the prices have gone up..

 

[ruffdog]

If all the countries of the world add tariffs on all the goods imported from other countries, then it seems everyone is paying a bunch more taxes. Who does this really help/hurt, and is that the intended result?

 

[Snobdds]

Inexpensive tools helped me build a successful career building things here in America. If we had gone isolationist in the 70s and 80s I would not have been able to build a construction business. I wouldn't own a tractor now and I wouldn't be blessed to be here discussing it on a computer built from parts and materials from almost 60 countries that was made by the most successful company in America. We have tried isolationism and trade wars. We have always lost and gone back to trading with our neighbors.

I could be a survivalist and do grow and create everything I need to survive but my quality of life will plummet and I will have to do many things I am not suited to. I would rather do what I'm good at and trade with others. The same goes for my views on a national stage.

Oh and trade prevents war. It just does.

I think your conflating a few things here. Trade, lack thereof, and total isolation. None of which are are entirely mutually exclusive.

First, tariffs do not impact the ability to trade with others. Other countries have had tariffs on US goods for decades and we still send our goods to those markets and vice versa. It always comes down to comparative advantage and economies of scale and scope. When labor is a high driving factor of cost, and you have people willing and able to work for pennies a day, no tariff or policy is going to change the profit that can be derived from that dynamic from a business bottom line.

There is always a market for cheap goods. It's no fluke that Harbor Freight is in every sizable market in every state. It makes no sense to buy an expensive tool for a one time job. That is common sense DIY usage and is unique from someone that depends on tools for a living. I think we can all agree, you get what you pay for and I'm sure those cheap tools had to be replace often. That is a business model that Harbor Freight relies upon, consumable consumption.

Trade has been happening since one cave man had more usable rocks than another caveman. The notion that trade can just stop with other countries is foolish. The idea that is lost is to have long sustaining trade. In the short term, imbalances in trade can survive. In the long run, it's an all consuming model when the trade is not fair for both parties. There will always be someone else (or another country) that will make it cheaper and with less labor cost. Then goods will come from that cost center and leave the prior supplier in the dust.

With knowing all that, it's in everyone's best interest to work towards long term trade deals where cost and labor are not entirely profit driven. Reducing barriers to trade, by both parties is in everyone's best interest. Free trade is the goal, however free trade will also lead to always going to the lowest labor center. That does not protect the 2nd lowest labor center and so on. Therefore we need agreements to sustain long term relationships.

Our current situation is not sustaining long term. The US consumer continues to get cheaper and cheaper goods, which just need replaced more often. That is a zero sum game. Neither the producer or consumer wins.

 

[radios1]

Inexpensive tools helped me build a successful career building things here in America. If we had gone isolationist in the 70s and 80s I would not have been able to build a construction business. I wouldn't own a tractor now and I wouldn't be blessed to be here discussing it on a computer built from parts and materials from almost 60 countries that was made by the most successful company in America. We have tried isolationism and trade wars. We have always lost and gone back to trading with our neighbors.

I could be a survivalist and do grow and create everything I need to survive but my quality of life will plummet and I will have to do many things I am not suited to. I would rather do what I'm good at and trade with others. The same goes for my views on a national stage.

Oh and trade prevents war. It just does.

trade has been enabling war, no money, no war!.. (meaning the other Country, actually 2).. we can do fine depending on ourselves, just like we have before..

 

[cdb2]

Tariffs are not the end game, free fair trade is. Tariffs are used to change behavior.

That may be the intention, but the actual effect is to destroy US manufacturing jobs. 200K Americans lost their jobs due to higher production costs last time around with no lasting improvement for the US steel industry workers. And here we are doing the same thing to try to fix the same problem but somehow expecting a different outcome. Insanity.

Let us compete fairly on world markets and you will see US grow and innovate.

US production does grow and innovate when allowed to compete fairly in world markets; tariffs make fair competition impossible because they burden US manufacturers with arbitrarily higher production costs than the rest of the world.

 

[radios1]

That may be the intention, but the actual effect is to destroy US manufacturing jobs. 200K Americans lost their jobs due to higher production costs last time around with no lasting improvement for the US steel industry workers. And here we are doing the same thing to try to fix the same problem but somehow expecting a different outcome. Insanity.

US production does grow and innovate when allowed to compete fairly in world markets; tariffs make fair competition impossible because they burden US manufacturers with arbitrarily higher production costs than the rest of the world.

we need to cut off those Countries that are using our money to prepare for war with us, though(2).. there are many other Countries we can deal with!..

 

[Fastowl]

Folks. I own a consulting firm that my partner and I have had for the last 20 years. A tiny piece is to look at the domestic steel industry as a gauge of the economy as well as a marker for natural gas consumption. Anyway for the past 2-3 months the US mills are running at or near the top of the utilization rate for U.S. mills over the past decade. Overall capacity utilization is now near 80% of nameplate capacity vs 73-75% a year ago. The US mills are turning out about 150,000 tons more per week compared to a year ago. China produces about 50% of total world steel production; the US in recent years about 5%. This issue doesn't turn around overnight; it took many years to get so messed up, it will take quite some time to reverse itself in any meaningful way. But with US steel production up 5-8% from a year ago we are going in the right direction. Be patient; slow progress is happening.

In 1990 the U.S. produced 50+% more steel than the Chinese; in 2000 they passed us and were producing about 15-20% more than we do. By 2017 they were producing 10 times the steel that the U.S. does. With no unions; no real labor laws; little or no pollution laws, etc. what do you think would happen? The only way to compete once you get the rules fixed is to be smarter and more productive. But you have to get rid of the predatory pricing.

 

[dragoneggs]

Folks. I own a consulting firm that my partner and I have had for the last 20 years. A tiny piece is to look at the domestic steel industry as a gauge of the economy as well as a marker for natural gas consumption. Anyway for the past 2-3 months the US mills are running at or near the top of the utilization rate for U.S. mills over the past decade. Overall capacity utilization is now near 80% of nameplate capacity vs 73-75% a year ago. The US mills are turning out about 150,000 tons more per week compared to a year ago. China produces about 50% of total world steel production; the US in recent years about 5%. This issue doesn't turn around overnight; it took many years to get so messed up, it will take quite some time to reverse itself in any meaningful way. But with US steel production up 5-8% from a year ago we are going in the right direction. Be patient; slow progress is happening.

In 1990 the U.S. produced 50+% more steel than the Chinese; in 2000 they passed us and were producing about 15-20% more than we do. By 2017 they were producing 10 times the steel that the U.S. does. With no unions; no real labor laws; little or no pollution laws, etc. what do you think would happen? The only way to compete once you get the rules fixed is to be smarter and more productive. But you have to get rid of the predatory pricing.

Nice post, Fastowl. Thanks for your insight.