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Posted: Apr 5, 2018 - 6:50pm

Trump wants $100B in more tariffs on China amid trade row
Move comes after China issued list of U.S. goods subject to possible retaliatory hikes
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Posted: Apr 1, 2018 - 11:08am

China to slap US with up to 25% bigger import tariffs in trade war retaliation
Beijing is hiking up tariffs on more than 128 US imports, including fruit and pork, as part of a tit-for-tat response to US President Donald Trump’s $60 billion package of tariffs imposed against China.
kcar

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Posted: Mar 24, 2018 - 1:11pm

 Lazy8 wrote:
 kcar wrote:

"As others have pointed out Obama bailed out the auto industry to reward favored political factions. He did the wrong thing for political reasons."

No. Sorry. As I pointed out with quotes in my long post below, Obama did not act alone—the Bush administration extended loans to the American automakers before Obama took office. Here's the relevant quote from my post: 

http://www.politifact.com/truth-o-meter/article/2012/sep/06/did-obama-save-us-automobile-industry/

Barack Obama, however, cannot claim full credit for this outcome. According to several experts, he needs to share it with his predecessor, President George W. Bush. Dr. James Rubenstein at Miami University co-wrote a post-bankruptcy assessment for the Federal Reserve Bank of Chicago. Rubenstein said no one should overlook the importance of Bush’s decision to use $17.6 billion in TARP money in December 2008 to keep General Motors and Chrysler afloat.


"The Bush Administration provided short-term bridge loans," Rubenstein said. "That allowed the Obama Administration to take a couple of months to assess the situation."

Aaron Bragman, the lead American automotive analyst for the financial forecasting group IHS Automotive, echoed the point. "The Bush administration is the one that actually acted to save them from an uncontrolled bankruptcy and shutdown," Bragman said. "The Obama administration's role was to fix them." 
You and Islander offer zero evidence that GW Bush and Obama's efforts to stabilize the Big Three were politically motivated attempts to reward allies. Maybe you somewhere else ten years ago but the Big Three were in serious trouble; their own inability to adapt a changing market (caused by rising oil prices) ran into a disappearance of customers due to the financial crisis. Had GM and Chrysler slipped into bankruptcy without government intervention the Great Recession could have been much worse, given all the people employed in the car industry and supporting industries. 
As for percentage of imports making up our aluminum consumption, CNN puts it at around 60%, relying on 2017 data from the Aluminum Association. 

http://money.cnn.com/2018/02/19/news/economy/steel-aluminum-us-economy/index.html

Bush oversaw the loans but Obama's administration dictated the terms of GM's bankruptcy. As Islander pointed out this upended the normal line of priority of creditors:  bondholders got got boned but the unions got to keep the extremely generous pension and healthcare deals that (in large part) got GM in trouble in the first place.

That "fixed" things all right...for the UAW. Everyone else who GM owed money to got the short end of that deal.

GM and its brands and infrastructure still had value. Those could have been sold off to more-viable firms, as Chrysler was eventually despite all the public money squandered on it. That didn't happen.

Yes, Bush gets his share of the lame for this enormous exercise in cronyism, but the worst of it happened under Obama.

 

It'd be great if you could provide some support or evidence for your guesses/opinions but based on my past dealings with you, I suspect that's asking too much. 

"As Islander pointed out this upended the normal line of priority of creditors"

Islander did not state this in his post of 3/23/18 @ 7:00am. Did he make that claim elsewhere?
Again, I repeat part of one of my posts. The two excerpts from a PolitFact article rebuts many of your notions. The UAW and autoworkers hardly made out like bandits; as of the date of the article, labor costs had fallen by a third and were competitive with foreign competition. And good luck finding bankruptcy proceedings on the scale of GM's and Chrysler's that don't cause investors to lose money. As this Washington Times article points out "GM bonds have been classified as “junk” since 2005." It's not the responsibility of bankruptcy courts or the federal governments to save institutional or private investors from their own bad decisions. I'm pretty sure a libertarian would agree with that last sentence; have your political leanings changed considerably over the last year or two?

According to this Wikipedia piece, "round $7 billion USD of GM bonds are held by "Mom and Pop-type investors", with one lawyer describing it as autoworker retirees versus retirees.<39><41> 

The sources cited are from the Wikipedia article. Perhaps Mom and Pop type investors should have gotten more help but at the time of the bankruptcy proceedings the entire US economy was on the verge of collapse. As far as I can tell, most analysts and economists think that the bailout was well executed. 

I don't have a great deal of faith in your ability to read and think at length, so if the text below gives you a case of "tl;dr" just read the last four paragraphs. And spare me your sweeping and unsupported cynicism. There's plenty to be upset about in American politics and Obama's administration was not perfect, but your assertion that the Big Three bailout was a payoff to political cronies is not the opinion of analysts and journalists considerably more informed about this matter than you. 


http://www.politifact.com/truth-o-meter/article/2012/sep/06/did-obama-save-us-automobile-industry/

When President Obama took office, he created a task force with a sweeping mandate to determine the fate of GM and Chrysler. The companies’ first proposals to the task force included downsizing, but the task force wanted deeper changes. In March 2009, Obama rejected those plans and said if the firms wanted federal money, they had to go through bankruptcy. That happened quickly. The car companies filed for bankruptcy in June and emerged in July.

Between 2008 and 2010, carmakers closed or scheduled the closure of 16 plants and cut their ties with about 2,500 dealerships. Stockholders were wiped out and creditors such as banks and pension funds wrote off about two-thirds of the value of their claims. The companies shed their entire obligation to pay for the health care of retired autoworkers and that burden shifted to an independent trust fund in which the United Auto Workers union appoints five out of 11 board members.

Under new ownership

What emerged was a smaller American auto industry with a very different set of owners.

The Italian car company Fiat became the majority stockholder of Chrysler. The second largest owner of Chrysler now is that retiree trust fund. For GM, the U.S. government now owns about 32 percent of the company. Private shareholders account for about 35 percent. The retiree trust fund owns about 10 percent.

The union gave up the right to strike through 2015 and ended automatic pay raises. Back in 2007, it had agreed to a two-tiered wage scale that allowed the companies to hire new workers at much lower pay. Between the new wage rates and the savings from taking over retiree health costs, labor costs fell by about a third and are now on par with those of the foreign carmakers.




Still, the present success leaves critics asking whether it came at too high a price. The Treasury Department estimates that about $23 billion will never be repaid. For James Sherk, an analyst at the conservative Heritage Foundation, much of that is due to "incredibly generous treatment of the unions." Sherk says the union’s retiree health benefit fund got about $21 billion more than it deserved compared to other creditors.

Mitt Romney has taken up that claim, saying the bailout was flawed by "crony capitalism." The union counters that the trust fund does not belong to the union and the fund took on the substantial risk of providing healthcare for retirees for all the decades to come. According to the Center for Automotive Research, that shift alone accounted for two-thirds of the labor savings that have made the carmakers competitive. 
...

A key question for advocates of a conventional bankruptcy is whether private lenders would have come forward to finance any such deal. The view of most analysts is that the private money would not have been there.

The Economist, one of the bastions of free-market thinking, came around to that view. Originally, it favored no government intervention. In April 2010, it offered an apology to President Obama.

"Given the panic that gripped private purse-strings," the magazine wrote in an editorial. "It is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended."

Even Sherk at the Heritage Foundation gives Obama credit for forcing the carmakers to go through bankruptcy and the necessary restructuring that followed. 
The Economist concludes "by and large Mr Obama has not used his stakes in GM and Chrysler for political ends. On the contrary, his goal has been to restore both firms to health and then get out as quickly as possible." 



Lazy8
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Location: The Gallatin Valley of Montana
Gender: Male


Posted: Mar 23, 2018 - 7:32pm

 kcar wrote:

"As others have pointed out Obama bailed out the auto industry to reward favored political factions. He did the wrong thing for political reasons."

No. Sorry. As I pointed out with quotes in my long post below, Obama did not act alone—the Bush administration extended loans to the American automakers before Obama took office. Here's the relevant quote from my post: 

http://www.politifact.com/truth-o-meter/article/2012/sep/06/did-obama-save-us-automobile-industry/

Barack Obama, however, cannot claim full credit for this outcome. According to several experts, he needs to share it with his predecessor, President George W. Bush. Dr. James Rubenstein at Miami University co-wrote a post-bankruptcy assessment for the Federal Reserve Bank of Chicago. Rubenstein said no one should overlook the importance of Bush’s decision to use $17.6 billion in TARP money in December 2008 to keep General Motors and Chrysler afloat.


"The Bush Administration provided short-term bridge loans," Rubenstein said. "That allowed the Obama Administration to take a couple of months to assess the situation."

Aaron Bragman, the lead American automotive analyst for the financial forecasting group IHS Automotive, echoed the point. "The Bush administration is the one that actually acted to save them from an uncontrolled bankruptcy and shutdown," Bragman said. "The Obama administration's role was to fix them." 
You and Islander offer zero evidence that GW Bush and Obama's efforts to stabilize the Big Three were politically motivated attempts to reward allies. Maybe you somewhere else ten years ago but the Big Three were in serious trouble; their own inability to adapt a changing market (caused by rising oil prices) ran into a disappearance of customers due to the financial crisis. Had GM and Chrysler slipped into bankruptcy without government intervention the Great Recession could have been much worse, given all the people employed in the car industry and supporting industries. 
As for percentage of imports making up our aluminum consumption, CNN puts it at around 60%, relying on 2017 data from the Aluminum Association. 

http://money.cnn.com/2018/02/19/news/economy/steel-aluminum-us-economy/index.html

Bush oversaw the loans but Obama's administration dictated the terms of GM's bankruptcy. As Islander pointed out this upended the normal line of priority of creditors:  bondholders got got boned but the unions got to keep the extremely generous pension and healthcare deals that (in large part) got GM in trouble in the first place.

That "fixed" things all right...for the UAW. Everyone else who GM owed money to got the short end of that deal.

GM and its brands and infrastructure still had value. Those could have been sold off to more-viable firms, as Chrysler was eventually despite all the public money squandered on it. That didn't happen.

Yes, Bush gets his share of the lame for this enormous exercise in cronyism, but the worst of it happened under Obama.
kcar

kcar Avatar



Posted: Mar 23, 2018 - 12:55pm

 Lazy8 wrote:
 kurtster wrote:
So we should just let our steel and aluminum industries just collapse and disappear and become totally dependent on foreign sources for such critical needs ?  

These are backbone industries.  Dumping is designed to destroy these businesses, not compete with them.  This is the long game.  Kill the competition and then raise prices.  Some things are worth keeping, even at the expense of other things.  We're not talking about buggy whips here.  Yes, there will be downstream effects.  Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away.  FWIW, the last numbers I saw is that we have added around 300,000 manufacturing jobs since the election.  Manufacturing jobs that we were told were gone and would never come back ...

Did you agree with Obama's rationale that the auto industry is too important to let fail and disappear and required support to keep it alive ?  Well in my estimation, this applies to our steel and aluminum industries even more so.

And just to say it again because it's so ignored by so many.  The study of economics is dependent on rational and predictable behaviour.  That is its primary weakness and renders pronouncements of economists nothing more than an opinion.  The marketplace is full of irrational behaviour, now more so than ever before.

3/4 of the steel used in the US was domestic before The Best Negotiator Ever f#cked with it. Steel is dense enough and cheap enough that transportation costs make up a significant fraction of the delivered price, so local manufacturing makes sense. The raw material (largely...scrap steel, but also iron ore) is plentiful locally.

Aluminum, not so much. We've lost 90% of the domestic market to imports but not due to skullduggery. The raw material (bauxite) largely comes from overseas—the US isn't in the top 10 producers worldwide. Aluminum is much more valuable than bauxite because of the energy it takes to turn bauxite into aluminum. So either transport cheap (but bulky) ore or transport finished metal—no contest. There's no advantage to making aluminum locally.

These are highly visible industries, portrayed as heroic by the American labor movement, but they're no more essential than DRAM or shoe manufacturing. The world has changed a mite since WW2. If we're fixing to fight a protracted worldwide conflict with submarines blockading our ports (and who knows, the current leadership may find the prospect attractive) then we'd have to re-start a few plants or build them from scratch, but we'd still have to import bauxite. If an embargo is so tight we can't bring in aluminum...good luck with that.

As others have pointed out Obama bailed out the auto industry to reward favored political factions. He did the wrong thing for political reasons. Trump is doing the wrong thing for political reasons.

Classical economics is the study of incentives. Incentives still matter even when people behave irrationally. We can know that this is stupid policy without an economics degree; if you have a point it seems to be that despite the incentives this move creates people will somehow behave as you hope rather than as rewards them.

Good luck with that too.
 
"As others have pointed out Obama bailed out the auto industry to reward favored political factions. He did the wrong thing for political reasons."

No. Sorry. As I pointed out with quotes in my long post below, Obama did not act alone—the Bush administration extended loans to the American automakers before Obama took office. Here's the relevant quote from my post: 

http://www.politifact.com/truth-o-meter/article/2012/sep/06/did-obama-save-us-automobile-industry/

Barack Obama, however, cannot claim full credit for this outcome. According to several experts, he needs to share it with his predecessor, President George W. Bush. Dr. James Rubenstein at Miami University co-wrote a post-bankruptcy assessment for the Federal Reserve Bank of Chicago. Rubenstein said no one should overlook the importance of Bush’s decision to use $17.6 billion in TARP money in December 2008 to keep General Motors and Chrysler afloat.


"The Bush Administration provided short-term bridge loans," Rubenstein said. "That allowed the Obama Administration to take a couple of months to assess the situation."

Aaron Bragman, the lead American automotive analyst for the financial forecasting group IHS Automotive, echoed the point. "The Bush administration is the one that actually acted to save them from an uncontrolled bankruptcy and shutdown," Bragman said. "The Obama administration's role was to fix them." 
You and Islander offer zero evidence that GW Bush and Obama's efforts to stabilize the Big Three were politically motivated attempts to reward allies. Maybe you somewhere else ten years ago but the Big Three were in serious trouble; their own inability to adapt a changing market (caused by rising oil prices) ran into a disappearance of customers due to the financial crisis. Had GM and Chrysler slipped into bankruptcy without government intervention the Great Recession could have been much worse, given all the people employed in the car industry and supporting industries. 
As for percentage of imports making up our aluminum consumption, CNN puts it at around 60%, relying on 2017 data from the Aluminum Association. 

http://money.cnn.com/2018/02/19/news/economy/steel-aluminum-us-economy/index.html


Lazy8
human
Lazy8 Avatar

Location: The Gallatin Valley of Montana
Gender: Male


Posted: Mar 23, 2018 - 12:34pm

 kurtster wrote:
So we should just let our steel and aluminum industries just collapse and disappear and become totally dependent on foreign sources for such critical needs ?  

These are backbone industries.  Dumping is designed to destroy these businesses, not compete with them.  This is the long game.  Kill the competition and then raise prices.  Some things are worth keeping, even at the expense of other things.  We're not talking about buggy whips here.  Yes, there will be downstream effects.  Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away.  FWIW, the last numbers I saw is that we have added around 300,000 manufacturing jobs since the election.  Manufacturing jobs that we were told were gone and would never come back ...

Did you agree with Obama's rationale that the auto industry is too important to let fail and disappear and required support to keep it alive ?  Well in my estimation, this applies to our steel and aluminum industries even more so.

And just to say it again because it's so ignored by so many.  The study of economics is dependent on rational and predictable behaviour.  That is its primary weakness and renders pronouncements of economists nothing more than an opinion.  The marketplace is full of irrational behaviour, now more so than ever before.

3/4 of the steel used in the US was domestic before The Best Negotiator Ever f#cked with it. Steel is dense enough and cheap enough that transportation costs make up a significant fraction of the delivered price, so local manufacturing makes sense. The raw material (largely...scrap steel, but also iron ore) is plentiful locally.

Aluminum, not so much. We've lost 90% of the domestic market to imports but not due to skullduggery. The raw material (bauxite) largely comes from overseas—the US isn't in the top 10 producers worldwide. Aluminum is much more valuable than bauxite because of the energy it takes to turn bauxite into aluminum. So either transport cheap (but bulky) ore or transport finished metal—no contest. There's no advantage to making aluminum locally.

These are highly visible industries, portrayed as heroic by the American labor movement, but they're no more essential than DRAM or shoe manufacturing. The world has changed a mite since WW2. If we're fixing to fight a protracted worldwide conflict with submarines blockading our ports (and who knows, the current leadership may find the prospect attractive) then we'd have to re-start a few plants or build them from scratch, but we'd still have to import bauxite. If an embargo is so tight we can't bring in aluminum...good luck with that.

As others have pointed out Obama bailed out the auto industry to reward favored political factions. He did the wrong thing for political reasons. Trump is doing the wrong thing for political reasons.

Classical economics is the study of incentives. Incentives still matter even when people behave irrationally. We can know that this is stupid policy without an economics degree; if you have a point it seems to be that despite the incentives this move creates people will somehow behave as you hope rather than as rewards them.

Good luck with that too.

kcar

kcar Avatar



Posted: Mar 23, 2018 - 11:55am

 islander wrote:

So uncompetitive steel / aluminum shuts down in the face of 'dumping' by foreign competitors (like OPEC flooding the oil market). Then when the competition is down, they raise their prices (like OPEC...). When the market price becomes competitive, people invest in modernized equipment and re-open facilities or expand into markets that were previously not justifiable (like the oil industry - wells start and stop, and we open shale, oil sands and other avenues for supply). In the end, our industries are more productive (because we modernized) and we are more competitive in the market.  If only there were another industry where we could look and see how this plays out... wonder what happened in the oil industry in the last few decades?

And yes, the auto industry should have been allowed to collapse. That whole debacle wasn't about saving an industry, or even 'American jobs'. It was all about picking who to screw while shuffling money to protect well connected people who made bad decisions.  Bond holders - who opt for lower risk because they have fewer political people looking out for them, and taxpayers got shafted. 

 

I really disagree with the bolded statement. Obama's administration stepped in because the financial crisis seriously and quickly hit the domestic car makers. The support his administration gave was not a prop for a slowly dying industry, although Chrysler and GM were not in good shape pre-recession. It most definitely was about saving an industry and related industries that became very quickly and dramatically exposed by the Great Recession. 

Did President Obama save the auto industry?

http://www.politifact.com/truth-o-meter/article/2012/sep/06/did-obama-save-us-automobile-industry/


We ask, did President Obama really save American auto makers? This is more a matter of opinion, and not an item for the Truth-O-Meter, but we can still shine some light on the question.

In broad strokes, the answer is yes, but with some help from the other party and with one huge unknown — no one can say what would have happened without massive government intervention. We spoke with a number of analysts and read many independent reports. There is no question that General Motors and Chrysler are profitable today. But so is Ford, a company that received no financial aid at all. The jobs have returned — although not nearly at the level they were before the industry began its steep decline in 2007.

Without a doubt, the American auto industry emerged smaller and more competitive.

In the words of the bipartisan Congressional Oversight Panel that assessed the impact of the government's efforts: "The industry’s improved efficiency has allowed automakers to become more flexible and better able to meet changing consumer demands, while still remaining profitable."

Barack Obama, however, cannot claim full credit for this outcome. According to several experts, he needs to share it with his predecessor, President George W. Bush. Dr. James Rubenstein at Miami University co-wrote a post-bankruptcy assessment for the Federal Reserve Bank of Chicago. Rubenstein said no one should overlook the importance of Bush’s decision to use $17.6 billion in TARP money in December 2008 to keep General Motors and Chrysler afloat.

"The Bush Administration provided short-term bridge loans," Rubenstein said. "That allowed the Obama Administration to take a couple of months to assess the situation."

Aaron Bragman, the lead American automotive analyst for the financial forecasting group IHS Automotive, echoed the point. "The Bush administration is the one that actually acted to save them from an uncontrolled bankruptcy and shutdown," Bragman said. "The Obama administration's role was to fix them." 
 ...

In 2008, the entire auto industry was in very bad shape. Layoffs at auto plants and among auto parts suppliers were on track to reach 250,000 workers. Gasoline prices were up and buying power was down. General Motors was virtually out of cash to pay its bills and Chrysler was not far behind. In November 2008, the New York Times ran the headline "GM teetering on bankruptcy, pleads for federal bailout".

The Center for Automotive Research, an independent research group that gets some funding from automakers, predicted harsh outcomes if GM and Chrysler went belly up. Beyond the immediate jobs lost, there would be a partial collapse of the supplier industry that would lead to a 50 percent drop in production at Ford and the American-based foreign car plants. Imports would replace 70 percent of the lost GM and Chrysler production, the group predicted.

When President Obama took office, he created a task force with a sweeping mandate to determine the fate of GM and Chrysler. The companies’ first proposals to the task force included downsizing, but the task force wanted deeper changes. In March 2009, Obama rejected those plans and said if the firms wanted federal money, they had to go through bankruptcy. That happened quickly. The car companies filed for bankruptcy in June and emerged in July.

Between 2008 and 2010, carmakers closed or scheduled the closure of 16 plants and cut their ties with about 2,500 dealerships. Stockholders were wiped out and creditors such as banks and pension funds wrote off about two-thirds of the value of their claims. The companies shed their entire obligation to pay for the health care of retired autoworkers and that burden shifted to an independent trust fund in which the United Auto Workers union appoints five out of 11 board members. 

...
 
The entire deal was financed with about $80 billion in taxpayer money. That included a special $5 billion set aside to keep cash flowing to car part suppliers when they found that their normal lines of credit had vanished.

...


Still, the present success leaves critics asking whether it came at too high a price. The Treasury Department estimates that about $23 billion will never be repaid. For James Sherk, an analyst at the conservative Heritage Foundation, much of that is due to "incredibly generous treatment of the unions." Sherk says the union’s retiree health benefit fund got about $21 billion more than it deserved compared to other creditors.

Mitt Romney has taken up that claim, saying the bailout was flawed by "crony capitalism." The union counters that the trust fund does not belong to the union and the fund took on the substantial risk of providing healthcare for retirees for all the decades to come. According to the Center for Automotive Research, that shift alone accounted for two-thirds of the labor savings that have made the carmakers competitive. 


...

A key question for advocates of a conventional bankruptcy is whether private lenders would have come forward to finance any such deal. The view of most analysts is that the private money would not have been there.

The Economist, one of the bastions of free-market thinking, came around to that view. Originally, it favored no government intervention. In April 2010, it offered an apology to President Obama.

"Given the panic that gripped private purse-strings," the magazine wrote in an editorial. "It is more likely that GM would have been liquidated, sending a cascade of destruction through the supply chain on which its rivals, too, depended."

Even Sherk at the Heritage Foundation gives Obama credit for forcing the carmakers to go through bankruptcy and the necessary restructuring that followed. 
The Economist concludes "by and large Mr Obama has not used his stakes in GM and Chrysler for political ends. On the contrary, his goal has been to restore both firms to health and then get out as quickly as possible." 


From Quartz: 


All told, the government invested $51 billion in General Motors in 2008 and 2009, mostly to finance the company through its 2009 bankruptcy. The Treasury says that after converting some of those loans to stock it recouped $39 billion, along with $700 million in dividends, for a loss of about $11 billion. (The bailout of Chrysler ended up costing taxpayers $1.3 billion after outlays of $12.5 billion).

While the government notes that rescuing GM in the midst of the financial crisis led to the creation of 370,000 new auto jobs and the survival of the company, the total cost-benefit analysis should include the potentially disastrous ripple effects GM’s collapse would have had on its supply chain and US manufacturers in the depths of the recession. Just avoiding mass lay-offs could have saved the public more than $100 billion in social insurance payments to laid-off workers and lost tax revenue, according to one study—admittedly, a study sponsored by the auto industry.

So the American taxpayers lost very little money from the US automakers bailout and avoided having to pay very massive "social insurance payments". According to study from the Center for Automotive Research (CAR), a research group partially funded by the automotive industry, the bailout saved 1.5 million jobs. 

You make a good point about the bondholders who lost out through GM's bankruptcy and restricturing plan. However—and I don't mean to sound like a heartless dick—those bondholders were willing investors who accepted market risks when they bought GM bonds. AFACIT, they wouldn't have gotten anything if GM went through bankruptcy without US government intervention. 


kcar

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Posted: Mar 23, 2018 - 11:02am

 kurtster wrote:

So we should just let our steel and aluminum industries just collapse and disappear and become totally dependent on foreign sources for such critical needs ?  

These are backbone industries.  Dumping is designed to destroy these businesses, not compete with them.  This is the long game.  Kill the competition and then raise prices.  Some things are worth keeping, even at the expense of other things.  We're not talking about buggy whips here.  Yes, there will be downstream effects.  Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away.  FWIW, the last numbers I saw is that we have added around 300,000 manufacturing jobs since the election.  Manufacturing jobs that we were told were gone and would never come back ...

Did you agree with Obama's rationale that the auto industry is too important to let fail and disappear and required support to keep it alive ?  Well in my estimation, this applies to our steel and aluminum industries even more so.

And just to say it again because it's so ignored by so many.  The study of economics is dependent on rational and predictable behaviour.  That is its primary weakness and renders pronouncements of economists nothing more than an opinion.  The marketplace is full of irrational behaviour, now more so than ever before.

 


What bothers me most about many of your posts is that you apparently accept Trump's assertions without bothering to read more about the issues or gather some facts on your own. As far as I can tell, Trump largely gathers his understanding of the world from TV news and opinion shows, which tend to oversimplify and exaggerate matters so as to boost their ratings. 

Imports of steel and aluminum have recently hurt domestic producers, true. But Tariffs don't help domestic companies or industries survive in the long run. Companies protected by tariffs rarely modernize or become more efficient while protected, perhaps because they don't think their protection will last long enough to justify the costs of modernizing.  
From https://www.brookings.edu/blog/up-front/2018/03/05/how-imports-helped-the-american-steel-industry/

It is more foreign competition, not less, that can revive the American steel industry. Without competition, the industry will have no incentives to make the right investments that will result in higher productivity. In fact, the data over the past three decades show that the American iron and steel industry has had a very modest export growth as measured by shares of total U.S. exports (it has consistently stayed around 1 percent, according to the Atlas of Economic Complexity developed by the Center for International Development at Harvard). What makes us think, then, that less competition will do the trick this time?

In addition, there are two more important factors to consider.

First, as has been pointed out by many economists, the imposition of trade tariffs on steel and aluminum will immediately increase costs of production for all the industries relying on these inputs (e.g., cars, beer, boats, etc.), making them less competitive in global markets and, therefore, hurting American exporters. Naturally, American consumers will either have to pay more to buy these products, or alternatively, decide to import them from other countries where they will be cheaper. The equation involving more expensive steel and aluminum imports, larger import flows of products substituting for the now less-competitive American ones that rely on steel or aluminum, fewer exports of products that have become less competitive due to the tariffs, or any combination of those three possibilities, will ironically worsen the trade balance which the president cares so much about.

Second, reducing import competition will have a direct negative impact on the productivity growth of these two industries, in turn slowing down the wage growth of their workers. Not having to compete as much with steel and aluminum foreign producers will reduce incentives for American businesses to invest in training their workers, in acquiring newer and better machinery, and, more importantly, in innovating. Thus, if at some point these tariffs are reduced or eliminated, American producers will be at a higher disadvantage for not having kept up with newer technologies. Naturally, the worsening of productivity growth in those two industries could also be detrimental for productivity growth in other industries. And, as it has been pointed out by many prominent economists, the slowdown in productivity growth is one of the greatest challenges all advanced economies face.


We are a far ways from becoming "totally dependent" on foreign sources for steel and aluminum. From CNN:
Imports make up about a third of the 100 million tons of steel used by American businesses every year, the Commerce Department says. More than 60% of the overall supply of aluminum comes from imports, according to the Aluminum Association, citing 2017 data. For years, imports have caused trouble, and led to plant closings, for the U.S. steel and aluminum industries.

It's not clear how much imports will fall if Trump follows through with the tariffs. It's also not clear whether American steel mills and aluminum smelters can increase production enough to match the overseas supply that would be lost. 

The American Iron and Steel Institute, the trade group for steelmakers, applauded the proposed tariffs and said domestic steel mills could increase production enough to close the gap. But experts question that claim. 

They point out that imports make up far too much of the market for some products, such as steel pipes and tubes, to have domestic mills make it up. And a steel mill that makes one type of steel product, such as sheet steel used in the body of a car, can't easily be converted to make another type of steel product, such as pipelines or tubing. 

"There's a necessity to that imported material," said Philip Gibbs, a metals analyst for KeyBanc Capital Markets. "In places like oil country, which uses pipe and tube, you'd definitely feel it. You would need to resuscitate a lot of mills that have been shut down in the last three or four years. It'd take a lot of capital to do that."



You wrote:
"Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away. "
That holds true for American steel and aluminum producers without tariffs. That's the free market. Tariffs, in distorting the free market and favoring a few companies, protect a few jobs in a small group of industries at the expense of higher domestic prices and a far greater number of lost jobs in other industries.
It might make sense to help domestic steel and aluminum producers modernize and find profitable market segments, through funding of R&D, tax breaks and low-cost loans for upgrading factories or building new ones. Obama did authorize a bailout of American auto manufacturers, true, but through loans in return for concrete restructuring steps from the manufacturers and not through tariffs. Enacting tariffs against foreign producers distorts market prices and fails to give domestic producers enough impetus to adapt. You lose a lot more jobs in industries that depend on cheap steel and aluminum imports than you save in steel- and aluminum-producing industries. 

Take a look at this article, especially the maps of the US. The maps tell the story quite starkly. 

How Trump’s Protectionism Could Backfire



https://www.nytimes.com/interactive/2018/03/20/business/how-trumps-protectionism-backfires.html
"For every job in Tupelo producing steel or aluminum, there are 200 jobs in industries that consume them that could be put at risk as tariffs push up the prices of these metals, according to research from Jacob Whiton and Mark Muro of the Brookings Institution."

This is true across the country. The lesson the White House has yet to figure out is that the tariffs meant to protect the businesses that make these metals will end up hamstringing the industries that rely on them.

...

The United States has been here before. When President George W. Bush imposed emergency tariffs on imported steel in 2002, prices of steel shot up. According to a survey by the International Trade Commission, almost one in five furniture and hardware producers, as well as a third of electrical appliance makers and one in 10 auto-parts suppliers, responded by relocating production abroad. Another studyfound that industries that use steel lost 200,000 jobs. That is more than all the jobs in the steel industry itself.


...

An analysis from the Council on Foreign Relations concluded that Mr. Trump’s tariffs could kill up to 40,000 jobs in the auto industry alone. 

 
 
... 

Seminal work by David Autor of the Massachusetts Institute of Technology, David Dorn at the University of Zurich and Gordon Hanson at the University of California, San Diego, shows that workers in counties whose industries were exposed to competition from China lost jobs and suffered declines in wages.

For instance, the surge of Chinese furniture into the United States between 1990 and 2007 amounted to more than $43,000 per each American worker toiling in the business. In the Tupelo commuting zone, where one in five workers made furniture, it hurt.

Professors Autor, Dorn and Hanson estimated that, in total over the period, Tupelo’s workers suffered a $14,120 “China shock” — $14,120 worth of goods per worker that, with other things remaining equal, would have been made by the area’s labor force had they not been imported from China. On average, every $1,000 worth of “shock” reduced the household wage and salary income for working-age adults by $549 per year, they estimated.

These workers are right to be angry. Policymakers of both parties have long ignored their plight, espousing “free trade” on the grounds that it enhances overall economic growth, while doing next to nothing to help those on the losing side.

And still, protectionism is the wrong tool to improve workers’ lot. It will do nothing to stop automation, for one. Critically, while perhaps protecting some workers in one, narrow industry, it will probably hurt many others.

To paraphrase Paul Krugman, if China is a truck that ran roughshod over the workers of Tupelo, Mr. Trump’s protectionism amounts to putting the truck’s gear in reverse and running them over again.



As for the notion of enacting tariffs for national security reasons: are you worried that Canada and Brazil and South Korea will economically hold us hostage? Or maybe Germany?

https://www.statista.com/chart/13107/where-the-us-gets-its-steel/

chart of US steel imports by country


According to PolitiFact, China is the source of about 2% of our steel imports.


kurtster

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Posted: Mar 23, 2018 - 8:06am

 islander wrote:

So uncompetitive steel / aluminum shuts down in the face of 'dumping' by foreign competitors (like OPEC flooding the oil market). Then when the competition is down, they raise their prices (like OPEC...). When the market price becomes competitive, people invest in modernized equipment and re-open facilities or expand into markets that were previously not justifiable (like the oil industry - wells start and stop, and we open shale, oil sands and other avenues for supply). In the end, our industries are more productive (because we modernized) and we are more competitive in the market.  If only there were another industry where we could look and see how this plays out... wonder what happened in the oil industry in the last few decades?

And yes, the auto industry should have been allowed to collapse. That whole debacle wasn't about saving an industry, or even 'American jobs'. It was all about picking who to screw while shuffling money to protect well connected people who made bad decisions.  Bond holders - who opt for lower risk because they have fewer political people looking out for them, and taxpayers got shafted. 

 
Yes, my sentiments as well, and yes my folks were GM bondholders who got screwed.  Quite frankly, I called for the whole house to burn down instead of the big bailout right before the 2008 election.  We would be so much better off now if we had let it happen.  It was a once in a lifetime opportunity to kill the banksters and end their power.  Instead we bailed them out and let them loot our Treasury in the process.

You're absolutely right about how the steel industry should modernize and be reborn with better facilities that will give them a competitive edge for 20 years or so because everyone else will be having to ride out their present facilities until they are required to modernize again.  Its a cycle.  I do live in Cleveland which was probably second only to Pittsburgh in steel production when I moved here.  We had Jones and Laughlin, Republic (the two became LTV Steel and still managed to go bankrupt) and US Steel here, all running full tilt.  Do you remember The Deerhunter ?  Early on, there is a lone house on a hillside over looking the Mill down below ?  I used to work a couple of blocks from that house for years.  I cruised that neighborhood and many others driving the coffee truck, serving and getting to know these people and their places first hand.  Its all gone now.  Just rusting hulks of abandoned shops and buildings.  I worked in a 100 year old foundry for a couple of years that had equipment that was right out of the turn of the 20th Century.

I can go on about this forever, but ... there are so many reasons that our steel industry collapsed, mostly self inflicted and also abuses by the unions and their pensions.  Remember when USS bought Marathon Petroleum, expansion outside of their core business, for what and just as the petroleum industry was going into crisis ...  Republic went bankrupt when they spent nearly a cool $ Billion on PeopleSoft

Now if the steel and aluminum industries respond properly and modernize, then this exercise will have been worthwhile.  If they don't and just keep coasting without reinvesting, then we are screwed and the board members should be locked up or something.  I also realize who and what Wilbur Ross is in all of this.  I am only cautiously optimistic, but its something we have to do.  The follow through is important as they say in golf, even if the results sometimes suck.  At least we will have some proof one way or the other.


islander
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Posted: Mar 23, 2018 - 7:00am

 kurtster wrote:

So we should just let our steel and aluminum industries just collapse and disappear and become totally dependent on foreign sources for such critical needs ?  

These are backbone industries.  Dumping is designed to destroy these businesses, not compete with them.  This is the long game.  Kill the competition and then raise prices.  Some things are worth keeping, even at the expense of other things.  We're not talking about buggy whips here.  Yes, there will be downstream effects.  Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away.  FWIW, the last numbers I saw is that we have added around 300,000 manufacturing jobs since the election.  Manufacturing jobs that we were told were gone and would never come back ...

Did you agree with Obama's rationale that the auto industry is too important to let fail and disappear and required support to keep it alive ?  Well in my estimation, this applies to our steel and aluminum industries even more so.

And just to say it again because it's so ignored by so many.  The study of economics is dependent on rational and predictable behaviour.  That is its primary weakness and renders pronouncements of economists nothing more than an opinion.  The marketplace is full of irrational behaviour, now more so than ever before.

 
So uncompetitive steel / aluminum shuts down in the face of 'dumping' by foreign competitors (like OPEC flooding the oil market). Then when the competition is down, they raise their prices (like OPEC...). When the market price becomes competitive, people invest in modernized equipment and re-open facilities or expand into markets that were previously not justifiable (like the oil industry - wells start and stop, and we open shale, oil sands and other avenues for supply). In the end, our industries are more productive (because we modernized) and we are more competitive in the market.  If only there were another industry where we could look and see how this plays out... wonder what happened in the oil industry in the last few decades?

And yes, the auto industry should have been allowed to collapse. That whole debacle wasn't about saving an industry, or even 'American jobs'. It was all about picking who to screw while shuffling money to protect well connected people who made bad decisions.  Bond holders - who opt for lower risk because they have fewer political people looking out for them, and taxpayers got shafted. 
black321
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Posted: Mar 23, 2018 - 5:58am

 kurtster wrote:

So we should just let our steel and aluminum industries just collapse and disappear and become totally dependent on foreign sources for such critical needs ?  

These are backbone industries.  Dumping is designed to destroy these businesses, not compete with them.  This is the long game.  Kill the competition and then raise prices.  Some things are worth keeping, even at the expense of other things.  We're not talking about buggy whips here.  Yes, there will be downstream effects.  Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away.  FWIW, the last numbers I saw is that we have added around 300,000 manufacturing jobs since the election.  Manufacturing jobs that we were told were gone and would never come back ...

Did you agree with Obama's rationale that the auto industry is too important to let fail and disappear and required support to keep it alive ?  Well in my estimation, this applies to our steel and aluminum industries even more so.

And just to say it again because it's so ignored by so many.  The study of economics is dependent on rational and predictable behaviour.  That is its primary weakness and renders pronouncements of economists nothing more than an opinion.  The marketplace is full of irrational behaviour, now more so than ever before.

 
Manufacturing added 196k jobs last year.  Better than 2016, but not as good as 2011 and 2014.  Manufacturing jobs have been growing since the recession, but still below where they were in 2008.  So, the evidence just isnt there yet to prove one admin is better than the other.  In general, its too early to speculate what good or bad trump has done for the economy.
And i dont agree that prices will go up if we dont do anything about the current trade deficit.  Still, i also believe making an effort to address some of the trade imbalances is a good idea...just not sure what trump is doing is the right or wrong way...?
kurtster

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Posted: Mar 23, 2018 - 4:42am

 kcar wrote:
Your account agrees with the assessments from economists that I've read, including Krugman's. The loss of jobs in sectors dependent on steel and aluminum imports outweighs whatever job gains are earned in domestic steel and aluminum firms. And as Krugman and others have pointed out, the cost per job saved to American consumers is shockingly high.

It's a waste of time to listen to Trump on such matters. As someone here pointed out, Trump has access to an army of government experts and databases but he just relies on his gut. Dubya did the same thing. 🙄
 
So we should just let our steel and aluminum industries just collapse and disappear and become totally dependent on foreign sources for such critical needs ?  

These are backbone industries.  Dumping is designed to destroy these businesses, not compete with them.  This is the long game.  Kill the competition and then raise prices.  Some things are worth keeping, even at the expense of other things.  We're not talking about buggy whips here.  Yes, there will be downstream effects.  Adjustments and change is inevitable.  Those that can adapt will survive.  Those that cannot will go away.  FWIW, the last numbers I saw is that we have added around 300,000 manufacturing jobs since the election.  Manufacturing jobs that we were told were gone and would never come back ...

Did you agree with Obama's rationale that the auto industry is too important to let fail and disappear and required support to keep it alive ?  Well in my estimation, this applies to our steel and aluminum industries even more so.

And just to say it again because it's so ignored by so many.  The study of economics is dependent on rational and predictable behaviour.  That is its primary weakness and renders pronouncements of economists nothing more than an opinion.  The marketplace is full of irrational behaviour, now more so than ever before.
kcar

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Posted: Mar 21, 2018 - 6:53am

 Lazy8 wrote:
 kcar wrote:
No buddy, I'm not. If you're relying on Trump for the straight facts, you're getting duped. Trump's insistence that we were running a trade deficit with Canada, for instance. IIRC he admitted later that he made that up while talking with PM Trudeau.   

You might want to hold your nose and read that Q&A with Krugman that I pointed people to. You'd probably learn a thing or two about tariffs, trade surpluses and deficits, etc.

Or you could listen to someone who makes his living in American manufacturing. Me, for instance.



When a hundred thousand shops like mine each lose a job or two that isn't as visible as a 500 man steel mill shutting down. Bruce Springsteen isn't going to write a song about them, no presidential candidates will get their pictures taken in front of an empty space in our (otherwise full) parking lot. But those losses are real and far bigger than the few gains we'll make.

This isn't mysterious, it isn't controversial (among economists anyway), it isn't hard to understand. It's possible to misunderstand it, of course—especially if it's in your interest to misunderstand it.

But it's easy to deny. That happens all the time.



 



Your account agrees with the assessments from economists that I've read, including Krugman's. The loss of jobs in sectors dependent on steel and aluminum imports outweighs whatever job gains are earned in domestic steel and aluminum firms. And as Krugman and others have pointed out, the cost per job saved to American consumers is shockingly high.

It's a waste of time to listen to Trump on such matters. As someone here pointed out, Trump has access to an army of government experts and databases but he just relies on his gut. Dubya did the same thing. 🙄
miamizsun

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Posted: Mar 21, 2018 - 4:31am

 Lazy8 wrote:
Or you could listen to someone who makes his living in American manufacturing. Me, for instance.

My company is vertically integrated—that is, we make the parts for our products ourselves. We employ a bunch of people (25 or so) in very busy machine and sheet metal shops. We make parts mostly from aluminum, but also some steel. Trump's trade tantrum will raise the prices of the parts we make.

It won't raise the prices of competitors who make parts overseas. Our raw material costs will go up, theirs will not. That applies regardless of where we sell the products we make out of those parts; we sell worldwide and exports dominate our business, but it applies to domestic sales as well. This will either reduce our sales, reduce our margins, or force us to reduce costs.

So look at what this means to the guys in those shops: their work has become more expensive. That increases the pressure on us to outsource, and to outsource overseas. Me? I'll be fine; I just design stuff. I get paid the same regardless of who makes the parts. But the guys I've worked with for years...it's gonna hurt them.

There are a lot more like them than there are in all the steel mills in the country.

When a hundred thousand shops like mine each lose a job or two that isn't as visible as a 500 man steel mill shutting down. Bruce Springsteen isn't going to write a song about them, no presidential candidates will get their pictures taken in front of an empty space in our (otherwise full) parking lot. But those losses are real and far bigger than the few gains we'll make.

This isn't mysterious, it isn't controversial (among economists anyway), it isn't hard to understand. It's possible to misunderstand it, of course—especially if it's in your interest to misunderstand it.

But it's easy to deny. That happens all the time.

 
March 1, 2018

AFL-CIO President Richard Trumka issued the following statement on President Trump’s decision to impose tariffs of 25 percent on steel imports and 10 percent on aluminum imports:

For years, we have called attention to the predatory practices of some steel exporting countries. Such practices hurt working people and cheat companies that produce in the U.S. We applaud the administration's efforts today to fix this problem. Effective enforcement of trade laws, including section 232, is critical to leveling the playing field and ensuring that U.S. steel producers and their employees have a fair shot in the global economy. Secretary Ross, Ambassador Lighthizer and Director Navarro have rightly advocated for these actions despite opposition from the Wall Street wing of the administration. This is a great first step toward addressing trade cheating, and we will continue to work with the administration on rewriting trade rules to benefit working people.




Lazy8
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Posted: Mar 20, 2018 - 8:15pm

 kcar wrote:
No buddy, I'm not. If you're relying on Trump for the straight facts, you're getting duped. Trump's insistence that we were running a trade deficit with Canada, for instance. IIRC he admitted later that he made that up while talking with PM Trudeau.   

You might want to hold your nose and read that Q&A with Krugman that I pointed people to. You'd probably learn a thing or two about tariffs, trade surpluses and deficits, etc.

Or you could listen to someone who makes his living in American manufacturing. Me, for instance.

My company is vertically integrated—that is, we make the parts for our products ourselves. We employ a bunch of people (25 or so) in very busy machine and sheet metal shops. We make parts mostly from aluminum, but also some steel. Trump's trade tantrum will raise the prices of the parts we make.

It won't raise the prices of competitors who make parts overseas. Our raw material costs will go up, theirs will not. That applies regardless of where we sell the products we make out of those parts; we sell worldwide and exports dominate our business, but it applies to domestic sales as well. This will either reduce our sales, reduce our margins, or force us to reduce costs.

So look at what this means to the guys in those shops: their work has become more expensive. That increases the pressure on us to outsource, and to outsource overseas. Me? I'll be fine; I just design stuff. I get paid the same regardless of who makes the parts. But the guys I've worked with for years...it's gonna hurt them.

There are a lot more like them than there are in all the steel mills in the country.

When a hundred thousand shops like mine each lose a job or two that isn't as visible as a 500 man steel mill shutting down. Bruce Springsteen isn't going to write a song about them, no presidential candidates will get their pictures taken in front of an empty space in our (otherwise full) parking lot. But those losses are real and far bigger than the few gains we'll make.

This isn't mysterious, it isn't controversial (among economists anyway), it isn't hard to understand. It's possible to misunderstand it, of course—especially if it's in your interest to misunderstand it.

But it's easy to deny. That happens all the time.


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Posted: Mar 20, 2018 - 1:48pm

 black321 wrote:

yeah well, not like the first bully we've had as prez.  in terms of atrocities, despite being loathsome, he's still proven to be less harmful than bush II...but we should keep this about the economics....and to that point, maybe this might have some benefit for the US trade picture. 

 
Kinda low bar though.
c.
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Posted: Mar 20, 2018 - 12:39pm

 kcar wrote:
No buddy, I'm not. If you're relying on Trump for the straight facts, you're getting duped. Trump's insistence that we were running a trade deficit with Canada, for instance. IIRC he admitted later that he made that up while talking with PM Trudeau.   

You might want to hold your nose and read that Q&A with Krugman that I pointed people to. You'd probably learn a thing or two about tariffs, trade surpluses and deficits, etc.
 
They're relying on "alternative facts."
kcar

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Posted: Mar 20, 2018 - 12:12pm

 kurtster wrote:

You're kidding, right ?

 


No buddy, I'm not. If you're relying on Trump for the straight facts, you're getting duped. Trump's insistence that we were running a trade deficit with Canada, for instance. IIRC he admitted later that he made that up while talking with PM Trudeau.   

You might want to hold your nose and read that Q&A with Krugman that I pointed people to. You'd probably learn a thing or two about tariffs, trade surpluses and deficits, etc. 
 
black321
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Posted: Mar 20, 2018 - 11:58am

 R_P wrote:

It's early days yet, but I guess that goes to show that "bullying is ok as long as it's our bully". And that neatly ties in to your other point as well.

 
didnt say that either...but lets not keep going off track
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Posted: Mar 20, 2018 - 11:51am

 black321 wrote:
yeah well, not like the first bully we've had as prez.  in terms of atrocities, despite being loathsome, he's still proven to be less harmful than bush II...but we should keep this about the economics....and to that point, maybe this might have some benefit for the US trade picture.
 
It's early days yet, but I guess that goes to show that "bullying is ok as long as it's our bully". And that neatly ties in to your other point as well.
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