My grandfather worked in a machine shop over 30 years ago. Even back then they worked mostly with imported product. According to him, the US steel was very low quality - aimed at industries that needed such huge amounts of it that shipping was expensive and quality wasn't an issue.
If that is still the case, then demand for US steel is determined by infrastructure investment, not trade.
I'm not saying he was wrong, but it's certainly an over simplification. I don't know where he was getting his steel, and it seems very likely that the source of US steel near him was of really low quality. The US steel near me is generally higher quality than the chinese steel around here. For simple hot or cold rolled steel, both are fine.
If you need nice steel, or nice case iron, the Chinese material is bad. You can't really grind any chinese cast iron that I have seen precisely, and none of the steel that I've seen from there has been clean or dimensionally accurate. For most uses, that doesn't matter, and it is totally fine. The European and American tool steel is FAR FAR better than anything that I've seen from china. I tend not to use chinese HSS for steel, since it breaks so easily.
Source: taking a break from machining steel on a bridgeport
I think it'll vary from one type of steel to another where the quality sources are. Here in the UK there absolutely are highly specialised grades of steel that we buy in from the US, and I suspect we could buy many more grades from the US if we wanted to. (Typically we can get most stuff from a European mill cheaper and quicker, but that's just a cost and logistic advantage, not a quality issue.)
There are multiple steel industries in the US. Especially back then, you had the very large, bulk producers, like US Steels Sparrow's Point plant (since closed), and then you have the specialty producers that target specific industries or uses.
That's right. The presence of alternatives or substitute goods is a moderating force on price increases.
The classic example is what meat to buy for dinner: beef has gotten expensive, so it's time to grab the chicken or pork this week. Your choice to choose an alternative to beef will help bring the price back down. We could take the example further to other people's choices, the butcher's response to reduced demand, etc, but we'll stop with: the economy is vastly complex, and all changes in conditions produce complex responses.
I think it's pretty clear that for the tariffs to work you have to play a long game. It's not like the capacity is there immediately so it needs to be built up slowly. and it will only be built up if the investors have confidence that the tariffs will still be in place once they built up the capacity.
If I had a company I would be very hesitant to build up US capacity because there is a good chance the tariffs will be removed again soon. I think right now everything is in limbo which is not good for anybody.
If plans for diversifying supply and finding alternative markets for goods impacted by retaliatory tariffs had happened first, much of the short term impact of what are basically import taxes passed to consumers could be assuaged or limited like if Apple had built alternative supply chains. However, we have lost long term markets for goods like soy beans that will take years to recover (see the farm bailouts pushed by the current administration to cover these costs) while not hedging against other short term losses or even building the increase in taxes into a credit so citizens see a net 0 from the tariffs.
Tariffs can be influential in trade negotiation but must be used like a scalpel, skillfully restricting trade in areas that don't cripple domestic industry while pressuring the other economy. this is incredibly difficult against such a large trading partner as China without building up alternative supply of goods or shoring up domestic capacity first. Blanket Tariffs, unless against a small country with small or specific exports, will hurt everyone involved much more than an existing deal. Meanwhile, promises of future gains from a new deal are just that, promises by politicians who already have the largest record of lying to the public and blocking any transparency like in the documented obstruction of the special counsel investigation. Usually, the costs are never made up by future gains and promises fall short if reveal themselves at all.
For steel, it may be that different countries have taken to what they can make the most profit from, diversifying production globally to meet demand. Domestic industry compensates for foreign competition by either doing it better/cheap/more profitable or specializing in ways that competitors can't like massive production of cheap steel foreign competition can't match touch due to high shipping costs or developing and producing a specialty steel that nobody else can match. If this specialization moves to an extreme so one type isn't made domestically at all, that's going to hit consumers and industry hard. It will take time to increase capacity or shift production, potentially away from more profitable and established goods, to meet demand. That lapse in supply could be huge, give US companies a cheap way into that market, but at the cost of further government intervention, higher taxes, and a step away from capitalism which allowed countries to specialize and decrease costs long term. In this example, that supply drop opened an opportunity to other countries like Russia who are conveniently dropping millions on a project in Kentucky. If US steel can't compensate and foreign groups are able to push into the domestic market anyway, what does the tariff do to help domestic industry at all?
We are in limbo then, with goods sitting around or being taxed higher to hopefully get a better deal than what exists. If that falls through, we are all much worse off from all this.
These tariffs are such a terrible idea. Not only does it hurt US manufacturing which has to pay for more expensive steel, lowering the competitiveness of US goods (and thus steel demand!) It also isn't guaranteed to help US steel manufacturing because the tariffs are only targeting China.
We could easily be in a situation where we're paying more for Japanese steel (for example) with not much benefit to US steel workers.
This may seem unrelated, but if US was willing to worsen its relations with china, and introduce tarifs punishing its own economy, it should have done it as sanctions against the horrible things China does to people in Xinjiang. Stories told by Kazakhs who were released from concentration camps in China are terrifying [1], and USA is one of the few countries that could actually help.
I think this problem could be traced back Clinton pushing for WTO admittance for China without conditions, IIRC the next Dalai Lama had already been seized by this time and the crack down/Han flood into Tibet was under way. I remember someone writing the West always falls for the promise of this huge Chinese market in exchange for normalizing trade and China changing after the people see what the world has to offer, but there's almost no evidence for this.
It's a fine sentiment. The american government needs to balance the need to protect chinese citizens (and other ones under influence from China) vs. the economic needs of americans, who are the government's primary responsibility.
The problem is that american citizens and businesses are heavily dependent on one specific source of imports -China- with little to no alternatives on certain goods [1]. It's a good long term aim to diversity the imports, but it needs to be done gradually, allowing sufficient time for american economy to adjust. Attempting to do that in one fell swoop would cause a lot of disruption and economic hardships to american citizenry.
Once the key imports are diversified, US will have much more room to put pressure on China, to curb their humanitarian abuses.
[1] China also holds a significant share of US bonds
It would help if the U.S. had a leg to stand on; the official numbers point to us having higher incarceration per capita; and both the public perception and medical statistics point to rape being expected in prison.
This may seem unrelated, but if China was willing to worsen its relations with the US, and introduce tarifs punishing its own economy, it should have done it as sanctions against the horrible things the US does to people in its prisons. Stories told by blacks who were released from prisons in the US are terrifying, and China is one of the few countries that could actually help.
What is happening in China is an abomination, and political pressure is necessary. However the US should expect to be held to the same standards when applying political pressure, and it needs to resolve its own problems too.
Source article points out that tariffs/threats lead to stockpiling of steel, which lead to more capacity coming online given the sales volumes -- but then companies ate from their stockpiles leading to a double-whammy of increased production / decreased demand.
So yes, it's related to global demand -- global demand that went on a primary rollercoaster ride triggered by tariffs. And the news media is rightfully blaming the 1 person (not even party, singular person) for the consequences of their actions. What a sordid state of affairs indeed.
“In response to current market conditions, we are taking actions aligned with our strategy by adjusting our global blast furnace footprint,” the steelmaker said in a release.
Hmmm, I wonder what those "current market conditions" could possibly be? Also from the link you posted:
As the U.S. and China move toward a resumption of trade talks this month, China has lowered its tariff rates for some other countries, CNBC reported citing an analysis by the Peterson Institute for International Economics.
...
Last month, the U.S. raised tariffs on $200 billion of Chinese products, to which China responded with tariffs on $60 billion in U.S. goods.
[+] [-] legitster|6 years ago|reply
If that is still the case, then demand for US steel is determined by infrastructure investment, not trade.
[+] [-] forgingsheep|6 years ago|reply
If you need nice steel, or nice case iron, the Chinese material is bad. You can't really grind any chinese cast iron that I have seen precisely, and none of the steel that I've seen from there has been clean or dimensionally accurate. For most uses, that doesn't matter, and it is totally fine. The European and American tool steel is FAR FAR better than anything that I've seen from china. I tend not to use chinese HSS for steel, since it breaks so easily.
Source: taking a break from machining steel on a bridgeport
[+] [-] radiowave|6 years ago|reply
[+] [-] tomohawk|6 years ago|reply
[+] [-] vlehto|6 years ago|reply
[+] [-] hinkley|6 years ago|reply
[+] [-] clarkmoody|6 years ago|reply
The classic example is what meat to buy for dinner: beef has gotten expensive, so it's time to grab the chicken or pork this week. Your choice to choose an alternative to beef will help bring the price back down. We could take the example further to other people's choices, the butcher's response to reduced demand, etc, but we'll stop with: the economy is vastly complex, and all changes in conditions produce complex responses.
[+] [-] maxxxxx|6 years ago|reply
If I had a company I would be very hesitant to build up US capacity because there is a good chance the tariffs will be removed again soon. I think right now everything is in limbo which is not good for anybody.
[+] [-] supertiger|6 years ago|reply
[+] [-] jjwhitaker|6 years ago|reply
Tariffs can be influential in trade negotiation but must be used like a scalpel, skillfully restricting trade in areas that don't cripple domestic industry while pressuring the other economy. this is incredibly difficult against such a large trading partner as China without building up alternative supply of goods or shoring up domestic capacity first. Blanket Tariffs, unless against a small country with small or specific exports, will hurt everyone involved much more than an existing deal. Meanwhile, promises of future gains from a new deal are just that, promises by politicians who already have the largest record of lying to the public and blocking any transparency like in the documented obstruction of the special counsel investigation. Usually, the costs are never made up by future gains and promises fall short if reveal themselves at all.
For steel, it may be that different countries have taken to what they can make the most profit from, diversifying production globally to meet demand. Domestic industry compensates for foreign competition by either doing it better/cheap/more profitable or specializing in ways that competitors can't like massive production of cheap steel foreign competition can't match touch due to high shipping costs or developing and producing a specialty steel that nobody else can match. If this specialization moves to an extreme so one type isn't made domestically at all, that's going to hit consumers and industry hard. It will take time to increase capacity or shift production, potentially away from more profitable and established goods, to meet demand. That lapse in supply could be huge, give US companies a cheap way into that market, but at the cost of further government intervention, higher taxes, and a step away from capitalism which allowed countries to specialize and decrease costs long term. In this example, that supply drop opened an opportunity to other countries like Russia who are conveniently dropping millions on a project in Kentucky. If US steel can't compensate and foreign groups are able to push into the domestic market anyway, what does the tariff do to help domestic industry at all?
We are in limbo then, with goods sitting around or being taxed higher to hopefully get a better deal than what exists. If that falls through, we are all much worse off from all this.
[+] [-] jayd16|6 years ago|reply
We could easily be in a situation where we're paying more for Japanese steel (for example) with not much benefit to US steel workers.
[+] [-] baybal2|6 years ago|reply
[+] [-] vertline3|6 years ago|reply
[+] [-] bsnnw|6 years ago|reply
[deleted]
[+] [-] chr1|6 years ago|reply
[1] https://translate.google.com/translate?hl=en&sl=auto&tl=en&u...
[+] [-] stevenwoo|6 years ago|reply
[+] [-] dexen|6 years ago|reply
The problem is that american citizens and businesses are heavily dependent on one specific source of imports -China- with little to no alternatives on certain goods [1]. It's a good long term aim to diversity the imports, but it needs to be done gradually, allowing sufficient time for american economy to adjust. Attempting to do that in one fell swoop would cause a lot of disruption and economic hardships to american citizenry.
Once the key imports are diversified, US will have much more room to put pressure on China, to curb their humanitarian abuses.
[1] China also holds a significant share of US bonds
[+] [-] smileysteve|6 years ago|reply
[+] [-] robocat|6 years ago|reply
* The US imprisons 4 times as many people than China per capita https://en.m.wikipedia.org/wiki/List_of_countries_by_incarce...
* Xinjiang Accounts for 21% of prison arrests
* The US has 2 million people in prison http://news.bbc.co.uk/2/shared/spl/hi/uk/06/prisons/html/nn2...
What is happening in China is an abomination, and political pressure is necessary. However the US should expect to be held to the same standards when applying political pressure, and it needs to resolve its own problems too.
[+] [-] tomohawk|6 years ago|reply
https://chinatribunal.com/about-etac/
[+] [-] makotech222|6 years ago|reply
[deleted]
[+] [-] fknewsnetwork|6 years ago|reply
[deleted]
[+] [-] bsnnw|6 years ago|reply
[deleted]
[+] [-] bsnnw|6 years ago|reply
[deleted]
[+] [-] bsnnw|6 years ago|reply
[deleted]
[+] [-] _khhm|6 years ago|reply
https://agmetalminer.com/2019/06/19/this-morning-in-metals-u...
"We are idling two blast furnaces in the United States and one blast furnace in Europe to better align our global production with our order book."
[+] [-] awinder|6 years ago|reply
So yes, it's related to global demand -- global demand that went on a primary rollercoaster ride triggered by tariffs. And the news media is rightfully blaming the 1 person (not even party, singular person) for the consequences of their actions. What a sordid state of affairs indeed.
[+] [-] microwavecamera|6 years ago|reply
“In response to current market conditions, we are taking actions aligned with our strategy by adjusting our global blast furnace footprint,” the steelmaker said in a release.
Hmmm, I wonder what those "current market conditions" could possibly be? Also from the link you posted:
As the U.S. and China move toward a resumption of trade talks this month, China has lowered its tariff rates for some other countries, CNBC reported citing an analysis by the Peterson Institute for International Economics.
...
Last month, the U.S. raised tariffs on $200 billion of Chinese products, to which China responded with tariffs on $60 billion in U.S. goods.
[+] [-] legitster|6 years ago|reply
[+] [-] forgotmysn|6 years ago|reply