From The Wall Street Journal, U.S. Steel Imports Spark Wave of Trade Complaints by John Miller
Excerpt:
American steelmakers filed 38 trade cases last year, the highest number since 2001, when the industry won White House backing for higher tariffs and penalties on state-subsidized or otherwise unfairly traded steel. The cases represent a wide variety of products—from pipes used in gas drilling, to specialty pieces used in electrical transformers.
Mark Perry noted in his blog, Carpe Diem
Making steel is already a profitable business for some domestic producers. The North Carolina-based Nuccor Corporation, one of the world’s largest steel companies, earned almost $2 billion in profits over the last three years, which works out to more than $1.5 million in profits every single day of the year and more than $1,000 every minute. Obviously, domestic steel producers like Nuccor can even be profitable when competing with foreign producers in a global marketplace.
To seek protection from more efficient, low-cost foreign producers by imposing tariffs on US steel buyers like GM and Ford, who will then be forced to charge higher prices for the new cars they sell to American consumers, is a little bit like arguing that domestic steel producers should be allowed, by government fiat, to break into our homes and steal our TVs. After all, stealing money from steel buyers and American consumers by imposing higher tariffs on foreign steel is really no different than if the employees of Nuccor Steel were legally allowed to break into the homes of Americans and steal their TVs, appliances, computers, and cars.
HKO
It seems every ten years the domestic steel industry sees fit to rattle their protectionist sabres. The once Nucor head Ken Iverson was so successful in reducing labor cost that he never sought protection from imports. Unfortunately some of his successors at the same company think otherwise.
In a fit of hypocrisy a recent Nucor executive sought protection against the EXPORT of natural gas because it would INCREASE the his company’s energy cost.
Besides the increase in raw material and consumer costs import restrictions also create a disadvantage for small distributors and manufacturers. As consolidations and rollups have reduced the number of small players the larger rollups have exercised considerable bargaining power with domestic mills that is unavailable to smaller competitors. Smaller distributors and manufacturers often turn to off shore suppliers to remain competitive.
Anti dumping legislation may be presented as an effort to protect domestic workers, but it is often a ruse to protect their companies against smaller competitors. Legislating domestic content for government projects also has a similar consequence.
Currency manipulation is the current justification for new efforts to restrict imports. But explain to me how Fed policy is much different. Explain to me how the bailout of GM is any different from state subsidy.
It is ironic that an administration that laments rising inequality would consider import restrictions that places smaller businesses at a distinct disadvantage to their larger competitors.
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