Tariff on foreign steel and such....

I’m being sincere in this question, why are so many up in arms about this proposed Tariff?

I’ve been listening to call ins on NPR and all against it are irrational dribble while the few that support it are cut short when they actually have good facts for it. (I know… not the best news source for unbiased opinions)

Ok China has increased it’s smelters a hundred fold over what we have and have a huge surplus that they are flooding the market with killing our mining and undercutting our product. What’s wrong with a tariff? Do we want American workers pushed to the income level of CHina and Mexican laborers? I don’t!!

Let’s through in the solar panel deal. Ya’ll libs remember when this was your pet project for being green and all the talk of the money it would create for Americans? Wrong… China undercut us and our Government (under obuma) did nothing! We also need to put a tariff on products like this!!! Solar energy is a joke and if you do buy into it, all you money is going overseas.

Was it not bad enough when nafta was passed?! At least Trump is trying to bring some business back to the U.S. Why the opposition? Is it simply because of the Blind hate for Trump?

Here is the WSJ editorial boards take - (they are pretty conservative)

https://www.wsj.com/articles/trumps-tariff-folly-1519950205

if it doesnt open, try opening with incognito window in chrome to bypass subscription stuff.

High points, some copy and pasted -

“…steel-using industries in the U.S. employ some 6.5 million Americans, while steel makers employ about 140,000. Transportation industries, including aircraft and autos, account for about 40% of domestic steel consumption, followed by packaging with 20% and building construction with 15%. All will have to pay higher prices, making them less competitive globally and in the U.S.”

higher prices will be paid by the consumers

We only import 2.2% of our steel from China. 16% is from Canada, 10% is from South Korea - big allies and BIG consumers of American goods. We are not competing with them for cost of labor -

Canada re-imports 50% of US processed steel… which will likely be decreased/less competitive.


To me, it all kind of rounds out like coal. Lots of jobs lost to automation (which US did not participate in much steel plant improvement over the last several decades, there is a good podcast on this i can send you), and dirty environmental effects from smelting etc aren’t such a bad thing to offshore. A very small number of jobs (140k in US) and investors will benefit, but the “trade war” and reciprocal tariffs from other countries will be painful on everyone. Seems like reasonable, non-hate-driven criticism to me?

http://www.nucor.com/story/chapter2/

Looks like most steel made in US is from recycled metals. Libs love recycling to coexist.

Lots of jobs in steel mills = lots of tax revenue. Libs love taxes.

Fred has great point on solar debacle. How much would it decrease the debt by banning all subsidies & allow the free markets to pick the winners? Sorta like before libs thought they were smarter than the forgotten men & women who risked their own money to start businesses. Do you want MAGA or You Didn’t Build That?

Politics completely aside here.

I’m about to build a house soon, hope to be breaking ground this year. I’m going to get the higher priced version of materials until anything (long-run smart or not) is implemented and the supply/demand curves find harmony again. To tariff something will immediately drive local supply to become more competitive but only because it’ll be worth paying the higher price. In the short run we’ll just pay higher prices, no capacity will be instantly available to fill the gap, driving the price even higher. I’m sure that my build cost will be way higher than if I did it a few years ago. It has me doubting what to actually do. In 2025, will I be looking back at my investment the way people looked back at houses they bought in 2007 or in the 80’s? My interest rate will be higher, the cost of the build will be higher.

I just wonder what the smart thing for me to do is.

Edit to add: I understand eventually competitive, local capacity will be built and supply will be sufficient. The initial prices will be just under tariff’d import prices, causing capacity to be built. Then there will be a global glut in supply. Foreign suppliers should initially feel that, reduce supply. Then eventually it’s possible that there will be a drop in prices from their side driving our prices back down. How long is that cycle? What is the long term effect of the jobs initially created and the cost of living impact and how do I not make a bad decision building a house at the beginning of this cycle?

BG

quote:
Originally posted by btodag

Politics completely aside here.

I’m about to build a house soon, hope to be breaking ground this year. I’m going to get the higher priced version of materials until anything (long-run smart or not) is implemented and the supply/demand curves find harmony again. To tariff something will immediately drive local supply to become more competitive but only because it’ll be worth paying the higher price. In the short run we’ll just pay higher prices, no capacity will be instantly available to fill the gap, driving the price even higher. I’m sure that my build cost will be way higher than if I did it a few years ago. It has me doubting what to actually do. In 2025, will I be looking back at my investment the way people looked back at houses they bought in 2007 or in the 80’s? My interest rate will be higher, the cost of the build will be higher.

I just wonder what the smart thing for me to do is.

Edit to add: I understand eventually competitive, local capacity will be built and supply will be sufficient. The initial prices will be just under tariff’d import prices, causing capacity to be built. Then there will be a global glut in supply. Foreign suppliers should initially feel that, reduce supply. Then eventually it’s possible that there will be a drop in prices from their side driving our prices back down. How long is that cycle? What is the long term effect of the jobs initially created and the cost of living impact and how do I not make a bad decision building a house at the beginning of this cycle?

BG


Unless I am missing something, there isn’t that much material in a “normal” house the tariffs would impact? Help me out here with your thought process of why these tariffs will significantly impact the cost?

RBF

quote:
Originally posted by Richard Beer Froth
quote:
Originally posted by btodag

Politics completely aside here.

I’m about to build a house soon, hope to be breaking ground this year. I’m going to get the higher priced version of materials until anything (long-run smart or not) is implemented and the supply/demand curves find harmony again. To tariff something will immediately drive local supply to become more competitive but only because it’ll be worth paying the higher price. In the short run we’ll just pay higher prices, no capacity will be instantly available to fill the gap, driving the price even higher. I’m sure that my build cost will be way higher than if I did it a few years ago. It has me doubting what to actually do. In 2025, will I be looking back at my investment the way people looked back at houses they bought in 2007 or in the 80’s? My interest rate will be higher, the cost of the build will be higher.

I just wonder what the smart thing for me to do is.

Edit to add: I understand eventually competitive, local capacity will be built and supply will be sufficient. The initial prices will be just under tariff’d import prices, causing capacity to be built. Then there will be a global glut in supply. Foreign suppliers should initially feel that, reduce supply. Then eventually it’s possible that there will be a drop in prices from their side driving our prices back down. How long is that cycle? What is the long term effect of the jobs initially created and the cost of living impact and how do I not make a bad decision building a house at the beginning of this cycle?

BG


Unless I am missing something, there isn’t that much material in a “normal” house

quote:
Originally posted by btodag
quote:
Originally posted by Richard Beer Froth
quote:
Originally posted by btodag

Politics completely aside here.

I’m about to build a house soon, hope to be breaking ground this year. I’m going to get the higher priced version of materials until anything (long-run smart or not) is implemented and the supply/demand curves find harmony again. To tariff something will immediately drive local supply to become more competitive but only because it’ll be worth paying the higher price. In the short run we’ll just pay higher prices, no capacity will be instantly available to fill the gap, driving the price even higher. I’m sure that my build cost will be way higher than if I did it a few years ago. It has me doubting what to actually do. In 2025, will I be looking back at my investment the way people looked back at houses they bought in 2007 or in the 80’s? My interest rate will be higher, the cost of the build will be higher.

I just wonder what the smart thing for me to do is.

Edit to add: I understand eventually competitive, local capacity will be built and supply will be sufficient. The initial prices will be just under tariff’d import prices, causing capacity to be built. Then there will be a global glut in supply. Foreign suppliers should initially feel that, reduce supply. Then eventually it’s possible that there will be a drop in prices from their side driving our prices back down. How long is that cycle? What is the long term effect of the jobs initially created and the cost of living impact and how do I not make a bad decision building a house at the beginning of this cycle?

B

Some excellent points are being made and some excellent questions are being asked.

Here is my $.02.

With it, you will not be able to buy a cup of coffee, but with almost completing my 70th lap around the sun and a 20+ year career in banking, 15 years + in heavy manufacturing, and a few seasons in the charter diving and fishing business tariffs are a subject I have encountered.

Most of my life, I have been completely against tariffs. Starting with the debacle of the “Smoot-Hawley” tariff’s which many blame for the Great Depression, I cannot see much value in their use. I guess you could say I tend to be a “free-market” capitalist if you want to put a label on me.

All of that being said, I am beginning to question some of my thoughts on the matter.

Why?

A couple of reasons. One, some of the countries already listed are selling steel into the US market for prices below their costs of manufacturing the product. Why would they do this? Some nations (China and Korea to name just two) do NOT take a short term view of their business practices. This means that when say, US Steel, makes a decision on a business matter, US laws require publicly-held companies to disclose their financial results. Due to this, these companies tend to make decisions that have an impact over 30, 60 or 90 days. Foreign businesses, especially those in China and Korea think 10, 20 or 30 years out. These foreign businesses will sell products into selected markets BELOW their costs in order to break into and eventually dominate the markets they chose. In the case of both China and Korea, their governments assist in this long term strategy as well. Interestingly, China has NO problem assessing a 25% tariff on all US manufactured products.

The one area that REALLY has long term implications on all this that no one is discussing is outright technological theft.

Years ago, China began conducting technological theft against US manufacturers - especiall

The SC aluminum companies are barely hanging on, and the once strong US steel industry is almost gone. From people I know inside the industry 2 things are hurting - energy costs & foreign countries “dumping” cheap metal here. Hopefully bringing back the US metal industry can put more people in jobs and revive the coal and RR business in the process. Trump is making a great move !

The net will be higher prices though, especially in the short term. Everyone agree with that?
Putting a tariff on imports to allow a local company to compete means their higher costs+margins=price will be the new price to the market. That will drive the cost of living up relatively, effectively making the steel worker’s wage lower than what it was (also applies to me and you). There will possibly be more steel workers getting paid though, so that’s good.

BG

Of course the price will increase, but will still be within the realm of “fair”. The spin off businesses alone will create enough jobs to make it all worth while. Every time my company makes or re-designs a product, I have to pay to re-tool and set up production. Everything costs - but in a capitalist world , everything that costs will also pay. This could be the thing that makes Trump great! Metal and coal will make things roll!

btodog, the price of building a home went up last year in part to a Trump tariff on Canadian wood. Estimates I have read are between $800 and $2800 per house.

The US is producing much much more with fewer workers, see the charts below.

Number of employees in Primary Metal durable goods.
https://fred.stlouisfed.org/series/CES3133100001

Industrial Production Growth
https://fred.stlouisfed.org/series/INDPRO

Sea Hunt 207CC,Yam F150
Carolina Skiff (old school model)17’ Suz D50

Thanks for that post bottom scratcher. Im not seeing the negatives. Looks like a win win for long term recovery Now if we can get rid of nafta.

quote:
Originally posted by Beaufort Boy

btodog, the price of building a home went up last year in part to a Trump tariff on Canadian wood. Estimates I have read are between $800 and $2800 per house.

The US is producing much much more with fewer workers, see the charts below.

Number of employees in Primary Metal durable goods.
https://fred.stlouisfed.org/series/CES3133100001

Industrial Production Growth
https://fred.stlouisfed.org/series/INDPRO

Sea Hunt 207CC,Yam F150
Carolina Skiff (old school model)17’ Suz D50


How do you read that first chart? Just number of employees, right? Doesn’t reference output as far as I can tell.

I could probably handle a $3k increase, probably just in a tizzy because my mind goes right to the impact that the increase in cost of fuel had on everything early 2000’s.

BG

http://markets.businessinsider.com/commodities/lumber-price

Lumber is less than 20% of the cost of a house. Labor close to 50%. Borrowing money will be your biggest expense if you have to borrow.

Liberalism, Find a cure.

Find a contractor/builder who will build on ‘cost plus’, labor will be no where near 50% … :wink:

I Built my own house without a contractor hiring all the subs. Not an exact on the 50% of cost being labor but is not far off and was close in many cases. Framer charged 24K and lumber was about 28K. I did the electrical but material was about 6K. Electrical quotes were around 12K. Just saying labor is expensive. Material cost, labor cost, finance costs are going up. I dont see a depression in any of the three for a long time. I would suggest to BG to get it done.

Liberalism, Find a cure.

quote:
Originally posted by Reelly Old

Find a contractor/builder who will build on ‘cost plus’, labor will be no where near 50% … :wink:


Cost plus can be a license to steal. Better to agree on a Contract price, and a realistic completion date.

I’m generally in favor of letting the markets set pricing. As long as the markets are unencumbered and ‘free’, that works better than anything else. So, generally, I opposed tariffs.

However, there may be situations where the markets are not free. This is clearly the case with organizations like OPEC. In OPEC, a group of producers get together to decide how much they will produce and how much they’ll charge for what they produce. They restrain production to keep prices high thus giving them the best possible return on investment. When prices are high, there is incentive for other nations to invest in developing their own petroleum production. 30-40 years ago, when OPEC would see some significant move to increase production outside of OPEC, OPEC would raise production to lower prices, thus removing the incentive to develop those non-OPEC resources. Other nations/companies would crank up development projects when prices were high (many $millions) only to have the bottom drop out when OPEC easily increased production. Every time that happened (dozens and dozens), the investment in the non-OPEC development was lost. So, sometimes markets are not free.

When it comes to steel, the Chinese government is basically subsidizing their steel production allowing it to sell well below what a free market would support. In a centrally controlled economic system, they can play those games. As Bottom Scratcher pointed out, state run industry has different drivers than private industry.

Further, there are some industries that we should and do consider to be essential to our national security. The ability to make steel and all the various alloys that we use in modern weapons production is extremely important. The Chinese willingness or ability to operate on a longer time perspective may be rooted in their desire to decimate our heavy industry.

End result is I support the idea of tariffs, when and if needed, to establish an adequately level playing field so our domestic producers can compete.

Impact of Tariffs So Far. At least Canada isn’t
Quoted from Census.gov (https://www.census.gov/construction/nrc/pdf/newresconst.pdf)
Privately-owned housing starts in June were at a seasonally adjusted annual rate of 1,173,000. This is 12.3
percent (±8.3 percent) below the revised May estimate of 1,337,000 and is 4.2 percent (±10.2 percent)*
below the June 2017 rate of 1,225,000. Single-family housing starts in June were at a rate of 858,000; this
is 9.1 percent (±8.8 percent) below the revised May figure of 944,000. The June rate for units in buildings
with five units or more was 304,000.

Lumber: $/1000 board feet, maybe turning around?

BG