Who really believes tariffs are good business

[BeSafe]

I was surprised to see Korea as such a large steel exporter.  Normally, raw material + cheep energy = value add commodity and Korea doesn't have any of the raw material in abundance.  So I looked into it!

The So. Korean Steel industry appears to have basically been a supply chain invention - they built up their steel making in the 80's because they needed raw input to their car/shipping industry.  They used Japanese tech (which itself is curious because of the cultural issues) and created an industry who's purpose is to feed its industrialized trading partners and industries.

At the time, they had low skill workers to employ and it made sense.  They've leveraged that jump start into being basically a "high quality steel maker for the NAFTA empire."  The US doesn't directly import very much steel from Korea but they get a lot of it indirectly though our partners as a value add product.'

 

[Pertinacious Tom]

Who really believes tariffs are good business? Steel Companies

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Lobbyists from steel companies like Nucor and trade groups like the Steel Manufacturers Association are set to testify at Thursday's hearing alongside small businesses and other trade groups that have been harmed by the higher prices created by the tariffs Trump imposed and that Biden has maintained. Those tariffs have shielded the American steel-making industry from some foreign competition, boosting profits and allowing for some marginal growth in terms of capacity and employment.


Those marginal gains have been offset by huge increases in steel prices—increases that have been passed along to steel-consuming industries and, ultimately, to consumers.
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"Any gains seen by the steel industry from the tariffs have been overshadowed by the losses in the companies downstream," sums up Stuart Speyer, president of Tennsco LLC, a Tennessee-based metal fabrication firm, in testimony to the ITC.
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[Pertinacious Tom]

How Trump's Tariffs on Chinese Chemical Products Backfired

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Per the ACC, the Trump administration failed to account for American manufacturers' reliance on intermediate products exclusively produced in China. "China is the primary source of many valuable inputs to U.S. chemical manufacturing processes, and for which few or no alternatives exist," an ACC representative said. "It would take years, and billions of dollars, to build manufacturing capabilities for these inputs in the United States or other countries."

Dyes stand out as some of the most notable examples of vital Chinese imports impacted by chemical tariffs. For U.S. manufacturers to produce Red 57, a red pigment commonly found in many cosmetic products, they must import 3-hydroxy-2-naphthoic acid, also known as BONA, from China. BONA is exclusively produced in China, forcing American manufacturers to bear the higher costs associated with importing these critical Chinese-made inputs for their final products.

The chemicals industry is among the most impacted by duties, with companies paying out $8.5 billion in tariffs since 2018, according to the ACC testimony. These added costs have ultimately been passed along to consumers, driving up the prices of final products in a variety of sectors, including pharmaceuticals, construction, and electronics. In the ACC's view, these higher costs are hindering American businesses as they struggle to compete against European and Asian chemical companies, limiting their ability to innovate, expand, and compete for foreign direct investment.
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Taxing our way to prosperity is as good an idea as it ever was.

 

[Raz'r]

How Trump's Tariffs on Chinese Chemical Products Backfired


Taxing our way to prosperity is as good an idea as it ever was.

Too bad there isn’t a small govt, low tax party eh? Turns out there never really was.

 

[Pertinacious Tom]

Tom will be along shortly to talk about free markets, civil liberties, and peace.

The answer to the topic question remains: Trump and Biden.

Already did! And we still won't tax our way to prosperity, despite Joe and Donald's dreams.

 

[Pertinacious Tom]

I disagree with @prevaricating Tom in that tariffs, for a public good, can be very useful.

But the thread, and life, are about what they ARE, not what they can be.

If politics were about what government can be, communism would be the best idea. It's not. Tariffs are about crony capitalism. They CAN BE about other things, but they're not.

 

[Pertinacious Tom]

The answer to the topic question continues to be Trump and Biden.

If Biden's Trade Policy Was Really Driven by 'Equity,' Trump's Tariffs Would Already Be Gone

If "equity" is the central principle guiding the Biden administration's trade policies, you wouldn't know it by looking at what has been done—or, rather, hasn't been done—in the past 18 months.


Still, that's what U.S. Trade Representative Katherine Tai claims. In a tweet on Wednesday, Tai wrote that Biden is taking a "whole-of-government approach to advancing equity."


"Equity is also central to our trade and economic strategy to create sustainable growth that is equitably shared," she wrote. "Addressing the challenges to communities of color is vital to that strategy."


If that were merely a big pile of progressive pablum, it would be easy enough to ignore. But it's also objectively inaccurate. If "equity" were the prime concern of the Biden administration, it would have long ago disposed of the tariffs imposed by former President Donald Trump on steel, aluminum, and thousands of other products. Those tariffs are nothing more than taxes—and taxes that fall most painfully on people who can least afford to pay them.


And if the Biden administration truly cared about equity, it wouldn't have stopped there. As research from the Progressive Policy Institute (PPI), a left-leaning think tank, has shown, tariffs of all kinds are regressive taxes that hike costs for consumers and make it particularly difficult for poorer households to afford basic goods.


Eliminating many tariffs that serve little purpose "would ease financial burdens in a small but real way for American low-income and minority workers and their families, helping to raise their living standards without intensifying competitive pressure," Ed Gresser, the PPI's vice president and director for trade and global markets, wrote in a report published in April.


Trump's tariffs have contributed to inflation and helped to artificially inflate the cost of everything from appliances to housing. About two-thirds of all imports from China are now subject to tariffs when they enter the United States, with the average tariff being 19.3 percent. That's six times higher than the average tariff on Chinese-made imports before Trump's haphazard trade war began. That's certainly not helping poorer Americans improve their standard of living.


But, as Gresser points out, other aspects of the U.S. tariff code are also to blame for imposing regressive taxes on poorer Americans. Under the "Most Favored Nation" (MFN) system of tariffs that are applied to imports from countries with which the U.S. does not have a specific trade deal, many common consumer goods are subject to higher tariffs than their luxury alternatives. Stainless steel spoons are tariffed at a much higher rate than far more expensive sterling silver spoons, for example, and cheap sneakers are charged a tariff more than five times higher than leather dress shoes.

Source: Progressive Policy Institute (https://www.progressivepolicy.org/publication/trade-policy-equity-and-the-working-poor/)



"This skew," Gresser writes, means that America's system of tariffs is not only "regressive, but actually discriminatory against the poor." ...

Keeping cronies rich and the poor in their place can be considered a "public good" I suppose.

At least, to Trump and Biden and their supporters. Not so much to me.

 

[Pertinacious Tom]

Baby Formula Tariffs Coming Back?

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A baby formula shortage gripped the nation starting in February of this year, after a major U.S. formula manufacturer issued recalls on three of its products and shut down its largest plant. At its peak 10 states faced out-of-stock rates of 90 percent or higher. At first, the formula shortage was exacerbated by existing FDA regulations, whose labyrinthine label and ingredient rules effectively prevented formula imports—even imports from the European Union, whose health requirements on formula are more up-to-date than U.S. regulations.

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This status quo is set to end shortly. The FORMULA Act will expire at the end of the year, and while the FDA will allow select formula imports until October 2025, foreign companies will be subjected to high tariffs on their product, causing price increases and likely shortages of the imported formula that so many families now rely on.

"Any time you add a tax of approximately 25 percent, some of that's gonna get passed onto consumers, and domestic prices will adjust upward to match the import prices," Lincicome told Reason. "And the second thing is, any time you add a tax of that level, you're gonna get less supply. Consumers and importers, retailers in the rest of the United States will try to avoid importing more formula if they can because there's gonna be less demand for it, cause it's gonna be expensive."

With trade warriors protecting parents from scary Euro formula that way, it's easy to see how someone could get tired of winning.

I just wish they actually would!

 

[Pertinacious Tom]

If it is just a bargaining chip, then Trump is hosed on his "national security" excuse and the WTO will calll him on it. I think all that came afterwards, though. He's rattled and he threw a tantrum, popped out a giant squirrel to occupy the headlines, then had to justify it.

Yes, Trump cried out "NATIONAL SECURITY" to grab power, since that's what authoritarians do.

And in yugely surprising news, Biden is going along with another of Trump's power grabs

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The Trump administration had to do the whole "national security" song and dance because it provided access to a convenient loophole to impose tariffs without the consent of Congress—thanks to Section 232 of the Trade Expansion Act of 1962, which delegates presidential authority over tariffs for issues relating to national security.

At the time, some observers pointed out that Trump's tactic of declaring economic issues to be national security issues vastly expanded the powers granted to the president under Section 232. Some even suggested that it opened the door for a future president to declare climate change a national security issue and assume massive new powers over trade.

Sure enough, that's what it looks like the Biden administration is now set to do.

Last month, the White House reportedly sent a proposal to the European Union that would see the U.S. and Europe (and presumably other countries like Canada and the United Kingdom) form a consortium that would agree to impose high tariffs on steel and aluminum produced outside the consortium. The goal, according to The New York Times, would be two-fold: "to bolster domestic industries in a way that also mitigated climate change."

The environmental angle is that countries with higher environmental standards for the production of steel and aluminum would make it more expensive for their domestic businesses to import metal made in places like China, where the environmental standards are less strict. The economic angle, of course, is that steel- and aluminum-consuming industries in America and Europe would end up having to pay artificially inflated prices—while steel and aluminum manufacturers would benefit from the added levels of protectionism.

And the legal angle is that all this can happen without President Joe Biden having to ask Congress because—you guessed it!—Section 232 of the Trade Expansion Act of 1962.
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Not just tired of winning here. Mortally exhausted by all the bipartisan winning.

 

[Pertinacious Tom]

US Trade Commission Observes Obvious

The stupid trade war benefits a few cronies at the expense of the rest of us. Eeek! A Nomix!

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The steel tariffs, for example, caused imports into the U.S. to fall by 24 percent, according to the ITC's report. The reduction in supply caused prices for steel products to rise by 2.4 percent. In response, U.S. steelmakers churned out more steel, and by 2021 domestic steel production was $1.3 billion higher because of the tariffs, the ITC reports. Similarly, domestic aluminum production increased by $0.9 billion as a result of the tariffs.

That might seem to fit neatly into the narrative that Trump pitched: Tariffs would restrict imports and revitalize American manufacturing.

But it's not the whole story.

The higher prices created by the steel and aluminum tariffs forced those costs onto businesses that buy steel and aluminum. As a result, they cut production by 0.6 percent. Production by those downstream industries fell by $3.5 billion as a result of the tariffs, the ITC report concludes.

Trump used to talk about tariffs as if they would impose new transaction costs on businesses in China. President Joe Biden's top trade officials have made a version of the same argument, claiming that the tariffs can't be removed because it would somehow ease leverage against China.

But Americans pay the full cost of the tariffs, and the real dynamic has always been a domestic one. Tariffs grant small advantages to some domestic industries at the expense of downstream producers and consumers.
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