The Foolishness Of Trump's Steel Tariffs In One Simple Chart

Authored by Mike Shedlock via MishTalk,

Trump hopes tariffs will bring back steel manufacturing jobs. It won't happen.

Trump wants to save steel-related jobs.

However, the jobs are gone and will never return. NAFTA has nothing to do with it.

The US is producing 7.7% more steel than in March of 1990 with over 48,000 fewer workers.

I created that Chart in Fred by totalling steel workers in Indiana, Ohio, Texas, and Pennsylvania. Those are the only states tracked now. If there were more states tracked in 1990, the decline in workers is even greater. There is production in other states but it is minimal.

Don't blame NAFTA. Steel employment went on a deep dive nearly four years earlier.

The fact of the matter is US plants are aging dinosaurs compared to China's. China invested in modernized plants, the US didn't.

Before anyone bitches about subsidies, please take a look at US subsidies in the aerospace sector from absurd defense spending contracts.

Consider Sugar and Corn

The US cannot compete with sugar production from countries like Brazil where cane grows better, so we have sugar tariffs. As a direct result of sugar tariffs, US candy production went overseas.

US crop subsidies support excess corn production which we dump on the rest of the world. Still, we have tariffs on ethanol from Brazil because it is cheaper to make ethanol from sugar cane than corn.

The US and EU are the worst offenders when it comes to agriculture. Global trade talks break down every year over US and EU agricultural policies.

Blatant Hypocrisy

It's easy to criticize China over steel because no one hears third world complaints against the US on agricultural policy.

Economic Madness

The bottom line is simple: If its good for the consumer, it's good policy.

Instead, Trump is promoting trade wars that mathematically cannot be won.

For a mathematical explanation of trade deficits, please see Trump's Tariffs Show He's "Clueless About Trade".

Also consider Disputing Trump’s NAFTA “Catastrophe” with Pictures: What’s the True Source of Trade Imbalances?

Trump's trade policies are set to exacerbate the next global recession, but economic illiterates are egging him on.

A global trade war looms.

It's economic and mathematical madness.

Comments

JimmyJones Fri, 03/02/2018 - 10:23 Permalink

Yeah, lets just keep doing it the old way because it has worked so well for regular peoples life style, two incomes needed instead of one for the same level of living.  We have progressed to hell. Let the war begin.  How many more Iron miners are needed to produce that Steel?  The factory has become more automated but has the mining industry in that time period?  How many more suppliers are needed to foster that automation?  You just can't look at the single industry you have to look at the entire line from raw material to finished product.  Granted Automation is still increasing.  Teach your kids basic electronic engineering, what is a capascistor, what is a resistor, a relay, a transistor etc, how do you program micro controllers, why would you want to program a micro controller?

JimmyJones Never One Roach Fri, 03/02/2018 - 10:28 Permalink

Bush Sr setup the ground work for NAFTA and China Most favored Nation status, Clinton put them into practice, magically Home Depot and Walmart were in position to take full advantage of the elimination of the Trade Quotas that disappeared from Most favored nation status being granted.  Obama was a Stooge and was there only to carry the torch forward for the Globalist.

In reply to by Never One Roach

Last of the Mi… Bes Fri, 03/02/2018 - 12:44 Permalink

regardless of the down votes, you're dead on. This is a tax, plain and simple on US consumers and the loser, like always will be the US consumer as he or she is the one who will pay more each and every time they go to buy something make of steel. Even if it is a can of Campbell's soup. What an absolutely moronic example. 

In reply to by Bes

Kayman Bes Fri, 03/02/2018 - 11:26 Permalink

You are too fucking dumb to know quality is the invisible component in pricing a widget. Chinese makes crap. The US had a good reputation for quality, until good US brand names started making their stuff in China.

 

In reply to by Bes

greenskeeper carl JimmyJones Fri, 03/02/2018 - 11:25 Permalink

An important step in realizing how badly we've been being fucked by the government is to realize not everything is Obamas fault, or the democrats. Accept that the republicans you've probably voted for are just as bad. Both bushs sucked, as did Reagan. Sure, Obama was the worst of the bunch, but every modern republican has done nothing but damage this country.

In reply to by JimmyJones

NumberNone greenskeeper carl Fri, 03/02/2018 - 12:02 Permalink

The villain in all of this is actually that business guru Jack Welch.  He set this shit in motion in the 70's but is touted by CNBC and the MSM as a genius.  He started the offshoring jobs because companies owe allegiance to shareholders, not employees.  

If you want the bad guy in this story, point the finger at Jack Welch. 

From a 2011.

When did offshoring become so prevalent?
The trend began in earnest in the late 1970s at large manufacturers such as General Electric. GE’s then CEO, Jack Welch, who was widely respected by other corporate chieftains, argued that public corporations owe their primary allegiance to stockholders, not employees. Therefore, Welch said, companies should seek to lower costs and maximize profits by moving operations wherever is cheapest. “Ideally,” Welch said, “you’d have every plant you own on a barge to move with currencies and changes in the economy.” Not only did GE offshore much of its manufacturing, so did its parts suppliers, which were instructed at GE-orchestrated “supplier migration seminars” to “migrate or be out of business.”

In reply to by greenskeeper carl

BurningFuld JimmyJones Fri, 03/02/2018 - 10:45 Permalink

Steel tariff using Trump logic is great for Canada since Canada has a trade deficit in steel with the US and will absolutely introduce a counter 25% duty. This should be great for Canadian steel producers. One small problem. Different plants are designed for and produce different grades and types of steel and will pretty much require new plants to replace lost types of steel from the different countries. The consumer will pay industries will re-locate off continent. Win win!!!

In reply to by JimmyJones

east of eden BurningFuld Fri, 03/02/2018 - 10:54 Permalink

Yes, you could be correct. What I know for sure is that after Trump imposed a 23% import duty on softwood lumber (again, for the 29'th time), the stock values of our forest product producers rose 85% last year, so, assuming the same thing occurs with his latest 'gambit', we should be looking at restarting the boilers at Algoma, Defasco and Acerlor Mittal.

Because you see, every time he fucks with our economy, our dollar goes down. It is already 30% lower than your dollar, so, I am not sure what makes these fucking cucks think that you have any advantage whatsoever in production, not when you are starting from a minimum 30% disadvantage, plus the costs of 10 million barrels a day of imported oil and gas.

In reply to by BurningFuld

east of eden Never One Roach Fri, 03/02/2018 - 10:48 Permalink

Bullshit.

Obama didn't 'send those jobs offshore', your own people did when Regan brought in his infamous tax cuts in the mid-80s'. So called 'sophisticated' captains of industry saw China as an 'easy grab', but they and their 4 Trillion got scuppered by the Chinese who refused to follow in the tracks of all the Latin American and South American countries that you have throughly screwed over the years.

So they beat you, badly. That more than anything else, brought on the financial collapse in 2007. So, Trump's answer to this? Fuck the economy, prices, labour supply, resource base, and trade, even more. The man is a total fucking lunatic.

If Trump is so 'serious' about achieving a zero trade deficit, then just stop importing what you can't pay for. That would be nice to see. Then you will get your depression for sure.

This move, along with all the other stupid moves are going to seal your fate, and a lot sooner than anyone thought.

In reply to by Never One Roach

g0demp3r0r east of eden Fri, 03/02/2018 - 10:55 Permalink

people want to live beyond their means and they want to whine like sissies when other people don't want to pay for it. we shouldn't be subsidizing shit jobs that don't exist anymore for GOOD reasons. there's a reason why people don't stand in a elevator with a fucking handle because we have BUTTONS. there's a reason why digging the foundation of a house with a fucking shovel is not done anymore .. BULLDOZERS ... but hey jobs jobs jobs let's dig holes and hire people to fill them up again

In reply to by east of eden

fx Never One Roach Tue, 03/06/2018 - 11:41 Permalink

" Obama sent all those jobs offshore, mainly to China. "

 

Oh, Obozo did it? Really? And I always thought, AAPL and WMT and GM and all these nice "American" companies outsourced ever larger parts of their value adding chains to emerging markets like China, Vietnam, india... To enrich mgmt and shareholders at the expense of employees and public welfare budgets....

Stupid me....

In reply to by Never One Roach

tmosley JimmyJones Fri, 03/02/2018 - 10:26 Permalink

"However, the jobs are gone and will never return"

What a retard. OF COURSE the jobs can come back, and they ARE. It's just a matter of reducing the regulatory burden, which  is a process well under way, and giving the "new" industries a little breathing room so they can grow.

Why do people act like change can only happen in one direction?

In reply to by JimmyJones

RedBaron616 tmosley Fri, 03/02/2018 - 10:46 Permalink

I wish you were right, but very few jobs coming back and still not in any significant numbers. Part of the problem is that once an industry is shut down, many people will the knowledge of how everything worked are either gone elsewhere or retired. To get good help out of America's public school system is asking for a miracle and our engineers anymore are mediocre at best. No longer do we have the equivalents of Kelly Johnson who oversaw the SR-71 Blackbird produced when everything was done by slide rules.

In reply to by tmosley

JimmyJones RedBaron616 Fri, 03/02/2018 - 10:54 Permalink

Our aerospace engineering is still good, we have great satellite engineering (big industry in my hood) but we are talking retail manufacturing, toaster ovens, dish washers, sinks, toilets, microwaves, TV's (yes they still aren't that complicated) not rocket science. I have said this before the Thorium regs that Clinton put in place keep us from being able to mine for and use Rare Earth Minerals, that keeps us from manufacturing electronic components. Our colleges do have very good robotics courses now and that is one step removed from manufacturing line engineering.

In reply to by RedBaron616

g0demp3r0r tmosley Fri, 03/02/2018 - 10:53 Permalink

those jobs won't come back in the same manner people think they will. as production becomes more efficient the amount of actual high paying jobs meant to match the old 40s and 50s steel industry won't add up. sure you may have an increase in the number of jobs but they won't match the same economic equivalent of what was lost. It's like expecting that hiring 10 people to flip 1 burger is going to really produce any net economic benefit 

In reply to by tmosley

JimmyJones Juggernaut x2 Fri, 03/02/2018 - 10:34 Permalink

Oh I do, the FED has no place to exist, they are not God and should not control currency creation.  Thats the Job of Congress, Andrew Jackson knew it, they tried to kill him but he succeeded.  Lincoln Knew it and got killed, JFK knew it and got killed.  The decoupling of the dollar from Gold in the 1970's shows that effect plain as day but the Globalist wanted Guns and Butter to have their wars at the expense of the future.

In reply to by Juggernaut x2