Author Topic: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum  (Read 36356 times)

no_free_lunch

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #220 on: March 09, 2018, 09:11:49 PM »
Ok.  Fair point.  So as long as canada is excluded we are all good with this then?


RichardGibbons

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #221 on: March 10, 2018, 01:00:13 AM »
Ok.  Fair point.  So as long as canada is excluded we are all good with this then?

Just to make the devil's advocate argument--and be a really strange Canadian--it's not clear to me why Canada should be excluded.  Just because USA has a big trade surplus with Canada doesn't mean that it can't have an even bigger trade surplus with Canada.  If your primary goal is to reduce the trade deficit, you can do it just as effectively by increasing the surplus with Canada as reducing the deficit with China.  Oil would be an obvious choice, since oil is even more important for national security than steel.

Putting that aside, I don't know the answer to your question because I don't know about the impact when retaliations hit.  If the rest of the world adds their own tariffs on US goods, doesn't that just leave USA in the same place with respect to the trade deficit as before, just with tariffs and less trade? I mean, I guess if total trade involving the USA importing or exporting falls by 10% because of tariffs, that would reduce the trade deficits by 10%.  But I think that's not what you're suggesting.

So is there some reason to believe that retaliatory tariffs won't hit America exports, effectively lowering American exports roughly the same degree that tariffs lower foreign imports?

Another thing I was thinking about was that this might actually be a consumption tax strategy to bring in revenue.  The tax cut is dramatically reducing government revenue, so maybe this is a way to get some of that lost revenue back in the form of a consumption tax.  If it's just steel, it probably isn't enough to move the needle, but if it's expanded to a bunch of goods then you're effectively introducing a regressive tax on everyone while still claiming that you're not raising taxes.  I don't feel like doing the math to figure out if that would contribute a significant amount of government revenue, but if so, it would be a clever strategy.

I also wonder why USA doesn't just go through the WTO and introduce tariffs based on other countries not meeting USA's labor and environmental standards.  Then the tariffs would actually be legal and if other countries tried to retaliate, USA would just win in the WTO.

Liberty

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #222 on: March 10, 2018, 05:20:56 AM »
Unintended consequences here we go:

Trump steel tariffs may leave these U.S. steelworkers jobless

http://www.reuters.com/article/us-usa-trade-steel-jobs/trump-steel-tariffs-may-leave-these-u-s-steelworkers-jobless-idUSKCN1GL2V9

Quote
Lang is one of around 780 workers at the Novolipetsk Steel PAO (NLMK) mill, NLMK's U.S. subsidiary which imports around 2 million tons of steel slabs annually from its Russian parent company. The slabs that the mill rolls into sheets for customers including Caterpillar Inc, Deere & Co Harley Davidson Inc and Home Depot Inc, are almost impossible to acquire from U.S. steel producers.

Bob Miller, Chief Executive Officer of NLMK's U.S. unit, said if his company's customers refuse to accept a 25 percent price hike as a result of the tariffs, nearly 1,200 workers could eventually lose their jobs - and the ones in Farrell would be the first to go when supplies of imported slabs run out.
« Last Edit: March 10, 2018, 12:37:06 PM by Liberty »
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Spekulatius

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #223 on: March 10, 2018, 06:44:11 AM »
Unintended consequences here we go:

Trump steel tariffs may leave these U.S. steelworkers jobless

http://www.reuters.com/article/us-usa-trade-steel-jobs/trump-steel-tariffs-may-leave-these-u-s-steelworkers-jobless-idUSKCN1GL2V9

Quote
Lang is one of around 780 workers at the Novolipetsk Steel PAO (NLMK) mill, NLMK's U.S. subsidiary which imports around 2 million tons of steel slabs annually from its Russian parent company. The slabs that the mill rolls into sheets for customers including Caterpillar Inc, Deere & Co Harley Davidson Inc and Home Depot Inc, are almost impossible to acquire from U.S. steel producers.

Bob Miller, Chief Executive Officer of NLMK's U.S. unit, said if his company's customers refuse to accept a 25 percent price hike as a result of the tariffs, nearly 1,200 workers could eventually lose their jobs - and the ones in Farrell would be the first to go when supplies of imported slabs run out.

A photo op with Trump in from of 500 rustic looking steelworkers will be worth it, even if 5000 jobs go to hell somewhere else. And I don’t think they would be unique to Trump either, almost any politician would make the same deal in a heartbeat. You want to be leary of politicians fixing things for you, especially when it concerns the economy.

A logical approach to trade would have been to go after the Gorilla (China) in term of trade deficit and have a serious talk a out the trade barrier they are putting up. There is an amazing amount of tariffs in China for all sorts of things (cars, consumer goods , but also many industrial parts) while they export the same thing in a good old mercantilistic fashion. but, I am guessing they it just takes too much time and is too messy and doesn’t provide the same populistic payback than saving a few steelworkers jobs.

I am wondering - who will be on the receiving end of this? If we get a  trade war, Boeing uses tons of aluminum and exports most of their airplanes and is and iconic  ŮS brand - stock looks bubbly too. Looks like stock they could release a lot of air in a hurry.
somewhere else.
« Last Edit: March 10, 2018, 01:28:25 PM by Spekulatius »
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VAL9000

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #224 on: March 10, 2018, 07:31:56 AM »
I disagree with tariffs and am very supportive of free trade.  At the same time, I am very comfortable with all kinds of taxes as a means to support the government, which in turn supports the people.

I'm torn on this issue.  Here are things that are interesting to me:
 - a lot of coal is used to make steel
 - a lot of steel is used in infrastructure spend
 - Trump is working on an infrastructure spending bill
 - you can only buy allied steel or tariffed steel, which the government will raise revenues on

Conclusion: If I'm going to spend hundreds of billions on infrastructure then I want to make sure that spend stays in the US as much as possible.

Trade wars aside, this doesn't seem like a terribly stupid plan.

Liberty

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #225 on: March 10, 2018, 12:40:44 PM »
There's no such thing as a free lunch. If the infrastructure plan costs more than it otherwise would have, for the exact same infrastructure, then it's US taxpayers that are paying those higher costs (sooner or later), and aren't spending the difference on other things (other products, other services, other investments, etc). It makes everyone a little poorer, except if you own a steel mill.
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no_free_lunch

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #226 on: March 10, 2018, 02:53:39 PM »
Not according to buffet. He is saying if you are running a trade deficit it net net is making you poorer.

VAL9000

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #227 on: March 10, 2018, 03:51:26 PM »
There's no such thing as a free lunch. If the infrastructure plan costs more than it otherwise would have, for the exact same infrastructure, then it's US taxpayers that are paying those higher costs (sooner or later), and aren't spending the difference on other things (other products, other services, other investments, etc). It makes everyone a little poorer, except if you own a steel mill.

This is true, but it comes down to being a tax.  If Trump raised income taxes by 1% I doubt that all of the US's trading partners would similarly freak out, even though that move would have a more detrimental effect on trade.

I think we are observing a disproportionate response given the recent tax cuts.  Yes, tariffs reduce trade but tax cuts increase trade.  If you sum up all of the policies enacted by Trump to date, I think you will find that they are net positive for trade.

Liberty

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #228 on: March 10, 2018, 03:53:38 PM »
There's no such thing as a free lunch. If the infrastructure plan costs more than it otherwise would have, for the exact same infrastructure, then it's US taxpayers that are paying those higher costs (sooner or later), and aren't spending the difference on other things (other products, other services, other investments, etc). It makes everyone a little poorer, except if you own a steel mill.

This is true, but it comes down to being a tax.  If Trump raised income taxes by 1% I doubt that all of the US's trading partners would similarly freak out, even though that move would have a more detrimental effect on trade.

I think we are observing a disproportionate response given the recent tax cuts.  Yes, tariffs reduce trade but tax cuts increase trade.  If you sum up all of the policies enacted by Trump to date, I think you will find that they are net positive for trade.

I think what people and markets have been reacting to is what this is a sign of, not the tariffs alone.
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VAL9000

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Re: Mr. Trump to Impose Stiff Tariffs on Steel and Aluminum
« Reply #229 on: March 10, 2018, 04:05:35 PM »
I think what people and markets have been reacting to is what this is a sign of, not the tariffs alone.

Fair.  I think we will have to wait and see how far this goes while remembering that, for the most part, anything that is done can be undone.