Trump Promises Steel Action: Expect Job Losses

The steel industry and steel stocks both cheer today’s news that Trump will take action against Chinese steel dumping.

by Mish

Bloomberg exaggerates the near-term effect, without bothering to consider the long-term effect in its report Trump’s Antidumping Promise Ignites World-Beating Steel Rally.

West Chester, Ohio-based AK Steel jumped 6.7 percent at 12:26 p.m. in New York, while Pittsburgh-based U.S. Steel rose 5.7 percent. They were the two best performers in the Bloomberg World Iron/Steel Index, which gained 0.4 percent.
On Wednesday, President Donald Trump said his administration will take measures “very soon” to stop foreign firms from selling steel in the U.S. at artificially low prices. A day later, his Commerce Secretary Wilbur Ross said that if an investigation finds imports represent a security risk, recommendations could include higher tariffs, quotas or a quota-tariff hybrid for “particular products from particular countries.”
The administration is looking into whether an influx of foreign steel and aluminum is damaging U.S. manufacturers severely enough to threaten national security.
The intent of such policies is widely seen as addressing excess steel capacity from China. However, it has raised concern from other American trade partners, including Canada which exports aluminum to the U.S. Chicago-based Century Aluminum Co. surged 9.3 percent.
China has defended its growing presence in overseas steel markets, with Premier Li Keqiang saying overcapacity isn’t the fault of one single country. The nation — which has argued that volume of Chinese steel shipments to the U.S. has fallen since 2015 — will use the WTO’s dispute-settlement mechanism to protect its interests.

Steel is Everywhere

The report Uses of Steel Materials in America: A History by Mid City Steel sums things up nicely: “Steel is everywhere”.

  • Steel is used as a major component in tools, machines, appliances, weapons, automobiles, buildings, ships, infrastructure, appliances and much more.
  • Most modern structures, such as skyscrapers, stadiums, airports and bridges, are created with a durable steel skeleton. Even structures that use concrete also use steel as a reinforcing material.
  • Steel is used in many different types of vehicles and appliances.
  • Steel is used in basic construction materials, due to its durability and strength. Some of those materials include screws, nails and bolts.
  • Steel is used in industries, such as mining, pipeline transport, aerospace, shipbuilding and heavy equipment design.
  • Steel is also found in other common materials, such as basic tools, steel wool and personal armored vests for security and law enforcement.
  • In addition to practical uses, steel is also employed in artistic uses, such as sculptures, framing and display structures.

Expect Job Losses

Steel companies cheer the news. Everyone else loses. It is a damn foolish tradeoff to raise prices everywhere in a desperate attempt to save steel jobs.

Trump will not save a single job with this action. Automakers are already struggling. Houses are already overpriced and unaffordable. Toll road charges are high enough already.

Whatever jobs the tariffs or quotas “save”, many more jobs will be lost in industries that use steel.

Trump does not care, either because he cannot think or because he is beholden to the rust belt that got him elected.

I lean more heavily toward the idea that Trump cannot think. It’s highly likely Trump is not beholden to anyone or anything but his own ego.

Mike “Mish” Shedlock

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