Tag Archives: steel tariffs

Ignoring The Lessons Of The Past …

Posted on by under Global Issues, Political commentary

hot stoveAs children, we learn by doing.  When we place our hand on the open flame of a gas burner, as I did at about age 4, we learn that it is hot, it hurts, and it gets us yelled at, so we don’t do it again.  Well, most of us don’t.  As adults, we have developed the ability to learn by not only our own past experiences, but also those of others, and at least in theory, we can use our ability to reason to determine likely outcomes for our actions.  So, when I read that cigarette smoking is responsible for certain diseases, then I can make the decision to not smoke, right?  Okay, bad example, for I am a 3-pack-a-day smoker, but you get the point.  We don’t need to drive our car over a cliff to know that it is not a good idea.

However, as you’ve often heard me say, it seems that we … the human race in general … fail to learn the lessons of history.  We keep making the same stupid mistakes, over and over.

Yesterday, Donald Trump imposed new tariffs on Chinese imports, to the tune of $200 billion, in addition to the $50 billion previously imposed.

“Today, following seven weeks of public notice, hearings, and extensive opportunities for comment, I directed the United States Trade Representative (USTR) to proceed with placing additional tariffs on roughly $200 billion of imports from China. The tariffs will take effect on September 24, 2018, and be set at a level of 10 percent until the end of the year. On January 1, the tariffs will rise to 25 percent. Further, if China takes retaliatory action against our farmers or other industries, we will immediately pursue phase three, which is tariffs on approximately $267 billion of additional imports.

We have been very clear about the type of changes that need to be made, and we have given China every opportunity to treat us more fairly. But, so far, China has been unwilling to change its practices. To counter China’s unfair practices, on June 15, I announced that the United States would impose tariffs of 25 percent on $50 billion worth of Chinese imports. China, however, still refuses to change its practices – and indeed recently imposed new tariffs in an effort to hurt the United States economy.

As President, it is my duty to protect the interests of working men and women, farmers, ranchers, businesses, and our country itself. My Administration will not remain idle when those interests are under attack.”

Even on the surface to those of us who are not economists, there are some obvious flaws with his plan. Make no mistake … there is no “if” here … there isn’t much doubt that China will impose retaliatory tariffs. But let’s take a look at another case, one from which we might have learned a lesson.

tiresIn 2009, American tire makers persuaded the Obama administration to impose tariffs on Chinese tires, and imports of tires from China fell sharply. But Chinese companies did not stop making tires in response to the tariffs — they simply moved production to other places, including to the United States.

Chinese tire manufacturer Giti, built a factory in South Carolina to make low-cost tires for Walmart.  Did the move keep some jobs in the U.S.?  Sure, but a study by the Peterson Institute for International Economics (PIIE) showed that consumers paid a hefty price: an extra $1.1 billion on tires as a result of a tariff that preserved, at most, 1,200 jobs. That is almost $1 million per job, for jobs paying an average of about $40,000.

The 2009 tire tariffs — and similar efforts by past administrations to tax everything from socks to solar panels — have generally failed to protect existing factories and jobs. The Chinese factory in South Carolina created new jobs for American workers but, in effect, the tariffs only moved jobs from one place to another … at a very high price.

Steel tariffs imposed in 2002 by President George W. Bush yielded similar results, penalizing not just consumers but companies that use steel to make other products, like construction companies and carmakers.  There are about 140,000 jobs in the U.S. steel-making industry, but by contrast, 6.5 million who work in industries that buy steel and will be hit hard by Trump’s steel tariffs.

GMDid you know that General Motors sells more cars in China than in the U.S.?  What do you suppose happens when China imposes tariffs on U.S. autos?  Or when the Chinese government calls for a boycott on U.S. goods?  As an authoritarian government, they do not operate under the same constraints as the U.S.

Trump claims that thus far his tariffs have not had much impact on the U.S. consumer, but if you are a savvy food shopper and pay attention to prices, you will have noticed that certain items have increased, some by quite a bit.  And … on 18 December 2017, the price per gallon for regular fuel was $2.16.  Today it is $2.84, a 31.5% increase.

Simply put, tariffs are taxes ultimately paid by American consumers, in the form of higher prices. In addition to the latest round of tariffs on China, there are the steel tariffs on nearly every nation, plus the retaliatory tariffs imposed on the U.S. by other nations.  Remember back when Trump said that trade wars are ‘easy to win’?  Guess what, folks … there are no winners.  Trump has not only failed to learn the many lessons of history but is seemingly unable or unwilling to apply reasoning and logic in his decision-making process.  And guess who’s going to pay the price, my friends.  Not Trump, not his rich cronies …

Don’t Be Fooled, Pennsylvanians!

Posted on by under Election 2018

On Tuesday, the good people in the 18th congressional district of Pennsylvania will head to the polls to choose a new representative to the U.S. House of Representatives.  I am begging you, Pennsylvania, to please, please vote with your heads and do not send Rick Saccone to Washington!  We do not need any more of his ilk … we already have plenty like him!

In January, I wrote a piece about Mr. Saccone, who is running against the democratic candidate, Conor Lamb.  A quick overview of the reasons not to vote for this ‘man’:

  • He is such a staunch supporter of gun rights for all, that he tried to push through a bill to force children’s restaurant/entertainment center, Chuck E. Cheese, to allow people to carry guns into the establishment. He claimed that to bar guns inside the restaurant was discriminatory.  Children’s lives matter less to this man than adult’s feelings.
  • He eschews freedom of religion, as he tried (and luckily failed) to pass a bill that would have required public school districts in Pennsylvania to post “In God We Trust”in every school building.
  • He supports budget cuts to K-12 education, childhood education programs, public libraries, child welfare, and other state programs as a means to reducing federal debt.
  • His own legislative expenditures far exceed those of his fellow representatives in the state legislature.
  • He holds a Christian nationalist ideology that seeks to institute a nation governed by conservative Christians based on their personal understandings of biblical law. (Hey, bud – ever hear of the 1st Amendment, or is the 2nd the only one you remember?)
  • He defended sexual predator and child molester Roy Moore during Moore’s failed Alabama senate bid last December.

I think this should be enough to convince every voter that we do not need his kind in the federal government, though to be sure, there are already plenty there that believe as he does.  Until a week ago, I had written Saccone off as a loser, certain that Conor Lamb would carry the day.  But …

A series of events took place that may well shove Saccone down the throats of an unsuspecting public.  First, there was Trump’s announcement that he is imposing import tariffs on steel coming into the country.  Pennsylvania is a steel-producing state.  Approximately 14% of the nation’s steelworkers are in Pennsylvania. Though there are some 34,000 currently employed in the steel-related industry, most experts agree that the tariffs won’t add many jobs in Pennsylvania, and will cost jobs in other industries.  However, the facts are often not the point, and to make certain that Pennsylvanians didn’t get their heads filled with too many facts, guess who arrived on the scene?

Donald Trump entered the fray this weekend to stump for Saccone.    While Trump spent the bulk of his 75-minute speech tooting his own horn, as is typical of Trump, he did manage to get in a few plugs for Saccone.

“I love this place. Hello, Pittsburgh! Hello, Pittsburgh! You know what? Do me a favor — get out on Tuesday, vote for Rick Saccone. Personally, I like Rick Saccone. I think he’s handsome. (Seriously???) The world is watching. I hate to put this pressure on you, Rick, but the world is watching, because I won this district.”

Conor Lamb (left) & Rick Saccone

Okay, so it’s not exactly a glowing recommendation, but the people in the crowds ate it up and cheered Trump and Saccone.  Perhaps more important is the media.  The largest newspaper in southwest Pennsylvania, the Pittsburgh Post-Gazette has glowingly endorsed Saccone.  And not only did they endorse Saccone, but they took the opportunity to take a swipe at Conor Lamb for something he hasn’t even mentioned.  They claimed that Democratic control of the House would hurt the country by setting the stage for a presidential impeachment, and that a Democratic House would drive the country to “distraction” by immediately pushing to impeach Trump.  Lamb has not once mentioned impeachment.

“If Mr. Lamb, 33, wins, it could well be the start of a Democratic wave. The prospect of a Democratic House may please partisans, but it might be bad for the country. The Democrats in the House have only one agenda item at the moment, and it isn’t health care or jobs. It is impeachment. Regardless of whether one likes this president or his policies, one must ask what the consequence for the country will be if we dive into so great a distraction.” – Pittsburgh Post-Gazette, 11 March 2018

Now, Conor Lamb has had the support of the unions, even deep in what is called ‘Trump Country’.  But it remains unclear how the news of the steel tariffs, as well as Trump’s claim to bring back the coal industry, for Pennsylvania is also a coal-mining state, may affect voters’ views.  The race at the moment is very close, being called a ‘dead heat’.  Again, I urge you, Pennsylvanians, do not be swayed by Trump’s and Saccone’s words, for we do not need a bigoted, guns-on-steroids idiot taking a seat in the U.S. House of Representatives!

A Rudderless Ship — Part II …

Posted on by under Global Issues, Political commentary

A candidate for the office of president spends a year, sometimes longer, on the campaign trail.  His or her sole goal is to make people like them, make people trust them, convince people to vote for them, believing that they are the person who will most nearly meet the voters’ needs and desires over the course of four years.  Then comes election night, and one of the people who spent all that time on the campaign trail is successful in his or her mission and goes on to take the oath of office in two-and-a-half months.  That period of time is a period of transition from being a candidate to learning to be a leader, from having a goal of winning the election to having a goal of doing the best job possible to keep the country and its people safe and prosperous.  During that transition period, the former candidate puts all the hoopla and razzmatazz of the campaign trail behind him and switches gears to the more serious topics of running a nation.  He will meet with the outgoing president on a near-daily basis, meet with advisors whose expertise is critical to the job he is about to begin.  It is a training period.  He is now busy trying to gain an understanding of how global economies work, the relations we have with other nations, how the president interacts with the other two branches.  And he is busy selecting his own cabinet and advisors from among the most skilled and knowledgeable people.

That is how it is supposed to work.  That is how it has most always worked.  But it is not how it worked after the last election.

It began with the intelligence briefings. A team of intelligence analysts has been prepared to deliver daily briefings on global developments and security threats.  In the first two weeks, Trump attended only two of the daily briefings, though Mike Pence did attend most.  With no knowledge of national security issues, most were stunned that Trump apparently had no intention of gaining such knowledge, either.

Then, Trump’s transition team copied highly sensitive documents and removed them from a secure facility during the presidential transition.  A definite ‘no-no’.  And then, his transition team, days before the inauguration, nixed plans for an orientation class that would have prepared political appointees and White House staff for a series of ethical and legal issues.  Ethics, shmethics, right?  Who needs it, right?

So, with that sort of a start, is it any wonder that the president and his staff are bumbling about?  But what has prompted this diatribe is that Donald Trump, nearly 14 months after taking that oath of office, has still not stepped up to the plate of doing the job for which he was elected, for he is still too damned busy campaigning for the 2020 election which, if justice prevails, will not see his name on the ballot!

During Trump’s lonnnnnnng (29 months) 2015-2016 campaign, he made a number of promises to his supporters, those who were caught up in his promises to “drain the swamp” in Washington, to “make America great again”, and above all, to keep America and Americans ‘safe’ from those terrible immigrants:  the Mexicans who were rapists and criminals, and most of all, the Muslims, all of whom must surely be terrorists!  Among his other promises were to bring back jobs in the coal and steel industries.

Now, Donald doesn’t know coal from a can of peas, and he didn’t bother to learn about fossil fuels vs alternative energy sources, because if he had, perhaps he might not have been so quick to promise.  But promise he did, and by jove he is going to keep that promise even if it destroys portions of the country.  And now the latest promise he is trying to knock out is bringing back jobs in the steel industry.  Oh Woe.

His m.o. here is to impose unreasonably high tariffs on steel imports from every nation on the globe.  I already explained in an earlier post what the almost-certain ramifications are going to be, so I will not waste your time with a reiteration, for it is not my point today.  My point today is that Trump has been advised by numerous advisors who understand far more than he about the global economic fallout of these tariffs, not to do it.  Gary Cohn, who was Trump’s Chief Economic Advisor, resigned this week because Trump was so determined to follow this destructive path.  Although I am not a huge fan of Cohn, he was the Director of the National Economic Council, and he has the knowledge and the experience that Trump clearly lacks.  So why won’t Trump listen to any of his qualified advisors?  Because he is not operating in the capacity of president, but instead he is campaigning for the 2020 election.

From an article in Politico :

“[Trump] sees steelworkers and other “forgotten men and women” in rural parts of the country, as he often calls them, as the core part of his political base, and he believes that betraying them would be political suicide as he looks ahead to his reelection campaign, according to aides.”

And when you think about that, and look back on the things he has done, you realize that every single move has been naught but an extension of his campaign.  This nation has no president.  I have often referred to the United States under Trump as a rudderless ship, and now it is more clear than ever that is precisely what we are … rudderless, without direction, and without a captain, for the captain is too busy trying to make friends with the sharks and he doesn’t know how to sail the ship anyway.

Who Will You Blame Now … ?

Posted on by under Environmental Issues, Political commentary

So far, in his 13 months in office, Donald Trump has managed to blame everybody but himself for the things that went wrong, while at the same time taking credit for positive things that started long before he even took office.  Eventually, that doesn’t fly any more, and I think we are near that turning point.  I don’t think he will be able to blame President Barack Obama or Hillary Clinton for some of the mistakes he is making these days.  For instance, …

  • Who will you blame, Donnie, for the shutdown of the Kemper County, Mississippi “clean coal” plant that ran $2.9 billion over budget before it even fired up, and has now been converted to cheaper, cleaner-burning natural gas? Did not you promise them coal was making a comeback, that coal would be “king” again?
  • Who will you blame, Donnie, for the next school shooting? How will you answer those grieving parents when they ask you “WHY?”  Wasn’t it your job to lead the way for stricter regulations on guns that would have made their children safer?
  • Who will you blame, Donnie, when at the end of 2018, your constituents, those 37% or so who still believe in you, ask you why they are having to pay income taxes far beyond the initial $1.50 pay increase they saw on their weekly pay vouchers? Didn’t you promise them this “tax plan” of yours would put more money in their pockets?  Did you forget to tell them about all the deductions you cut out, so that at the end of the year they would owe even more than in years past, while all your wealthy donors are sitting pretty with their extra hundreds of thousands?
  • Who will you blame, Donnie, when every country we trade with imposes a tariff on goods they import from the U.S., when the price to the U.S. consumer on everything from food to clothing to household goods increases? Did you really think the EU, Canada, Mexico and the UK, not to mention China, would simply accept the tariffs on the goods they export to us without retaliation?  Will you blame Gary Cohn, who tried to explain to you why the tariffs were a bad idea?
  • Who will you blame, Donnie, when the people who placed their faith, their trust in you, cannot afford to buy a washing machine, a new refrigerator, let alone a new car, for the price of steel has increased by some 35%, raising the price of consumer goods containing steel by some proportional amount? And how will you explain the lies that you, Peter Navarro and Wilbur Ross told about the “minimal impact” of the steel tariffs?
  • Who will you blame, Donnie, when the drinking water in West Virginia starts making people ill because you rolled back the regulations that kept coal companies from dumping their waste into the streams?
  • Who will you blame, Donnie, when the rate of kids born with breathing conditions suddenly doubles because of the increased carbon dioxide that makes the air nearly unbreathable near major industrial centers?
  • Who will you blame, Donnie, when all the lies you have told, the promises you have broken to take care of the ordinary people, catch up with you?
  • And here’s the big one, Donnie … who will you blame when you finally taunt Kim Jong-un one time too many and he declares war, and none of our old allies come to our aid? Will that, too, be Barack Obama’s fault?  Will it be “Crooked Hillary’s” fault?  Will it be “Lyin’ Ted’s” fault?  Or perhaps you will blame Jeff Sessions for recusing himself?  Or perhaps it will not matter, for there may be nobody left to care.

For an entire year, you blamed everything on your predecessor for your mistakes, while at the same time stealing the credit that rightly belonged to him for a good economy.  For three years now, you have ranted about “Crooked Hillary”, who was in fact far more honest than you ever thought about being.  You have blamed the democrats for your woes, when it was your own party who holds a majority in both chambers of Congress.  The honeymoon is over.  There is nobody left to blame but Donald J. Trump for the ills of our nation.  The man who promised to “Make America Great Again” has failed miserably and now the time has come for him to accept the blame.

Until January 2017, we were mostly respected by our allies.  Now they mock and deride us.  The president of Mexico refuses to come for a visit.  The people of the UK do not want Trump to visit there.  To the best of my knowledge, Putin of Russia and Duterte of the Philippines are the only two leaders with whom Trump shares a camaraderie.  Speaks volumes, doesn’t it?  Remember the old adage, “We are judged by the company we keep”?  Think about that one.

Trump’s Trade War

Posted on by under Global Issues, Political commentary

So, you think Trump’s intention to place tariffs of up to 25% on steel and aluminum imports won’t matter to you?  You’ve skimmed the headlines, shrugged your shoulders, and moved on to the juicier news surrounding Jared, Ivanka, Hope Hicks, Donnie and others in the chaotic White House?  Well guess what … it will matter to you, and in more ways than one.

First, how much did you pay for that last clothes dryer you bought?  Around $400?  Well, if you have to replace it, look for your next one to cost around $600.  The imported beer/wine you like from France/Italy?  Add 30% or so to the price a month from now.  And a new car?  Don’t even think about it.

Long story short, Trump has decided, against the advice of many in his administration, including Gary Cohn, Director of the National Economic Council and Trump’s chief financial advisor, to assess tariffs of up to 25% on steel and aluminum imported from … everywhere.  What happens when Maytag needs to buy more steel to manufacture clothes dryers?  It costs them 25% more.  Do they pass this cost on to you?  Of course, but not before increasing the total cost by an additional 10% – 15%, for their overhead is based on a calculation as a percentage of raw materials.  So now your clothes dryer is 35% more than the last one, and that does not even factor in normal price increases due to inflation.

Trump’s idea is that companies like Maytag, in the above example, will stop buying exported steel and buy steel made in the U.S.  Well, guess what?  There isn’t enough of it to go around.

Next scenario.  U.S. companies export goods to all over the world.  Next time Le Bon Marché of Paris or Harrods of London are deciding what brand of jeans to carry, guess what?  They may well pass over U.S.-made Levi-Strauss jeans, for the EU will have imposed a 25% import tariff on that brand, which makes it cost prohibitive, for shoppers will only pay so much for a pair of Levis.  European Commission President Jean-Claude Juncker said the bloc is prepared to respond forcefully by targeting imports of Harley-Davidson Inc. motorbikes, Levi Strauss & Co. jeans and bourbon whiskey from the U.S. So, now Levi-Strauss is losing overseas business, thus must raise their prices to domestic buyers to cover the shortfall.  So, next time you want to buy your kids Levis for back-to-school, don’t be surprised that they cost more.

There are long-term and long-range consequences to the action of imposing hefty tariffs on imports that Donald Trump has not considered, in part because he doesn’t understand international trade.  His more intelligent, economy-savvy advisors have tried to explain it to him, to talk him out of such a foolish move, but with no luck, because when Trump decides he wants to do something, he will do it, come hell or high water.  But … there is more to this story than meets the eye.

carl icahn

Carl Icahn

Carl Icahn … name ring a bell?  He is said to be the 26th wealthiest person in the world, with a net worth of $16.9 billion.  He is the founder and ‘controlling shareholder’ of Icahn Enterprises.  The man knows how to make money, just not always in an honest, ethical or moral manner.  He is what is known as a corporate raider. Funny, but just a few days before Trump’s decision to impose the steel tariffs, Carl Icahn sold $31.3 million worth of shares in the crane and lifting equipment supplier Manitowoc Company – a company heavily reliant on … guess … imported steel.  The value of the shares he sold has since dropped by around $6 million. Coincidence?  I think not.  Oh … by the way … Icahn is also a former Trump ‘special advisor’.

Earlier today, after announcing that he would defy logic and move forward with his tariff plan, Trump said, “Trade wars are good, and easy to win.”  Another of his many lies … there are no winners in a trade war, only losers.  And it is a reverse equation, for the poorer you are, the more you will lose.  The rich, like Carl Icahn and Donald Trump, will lose very little, if anything.  You and I, my friends, stand only to lose. Republican Senator Ben Sasse hit the nail on the head when he said …

 “Trade wars are never won. Trade wars are lost by both sides. Kooky 18th century protectionism will jack up prices on American families — and will prompt retaliation from other countries. Make no mistake: If the President goes through with this, it will kill American jobs — that’s what every trade war ultimately does. So much losing.”

There is much more to say on this topic, but for now, you get the idea of why you shouldn’t pass over the news of the day, for it is another foolish Trumpian move that will cost you … bigly.

Note to readers:  Surprise Saturday will return soon, along with Jolly Monday and Wednesday’s Good People posts.  For the moment, I am still awaiting Jolly’s return, for I need his help to write these.  Thank you for your continuing patience.