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U.S. Steel to Restart Illinois Plant Operations Amid Trump’s Tariff Plans

#1

U.S. Steel to Restart Illinois Plant Operations Amid Trump’s Tariff Plans

United States Steel Corp. X +3.71% said it would restart a blast furnace in Illinois to handle the higher demand it expects from President Donald Trump’s proposed tariffs on foreign steel.

https://www.wsj.com/articles/u-s-steel-t...1520430223
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#2
(This post was last modified: 03-07-2018, 02:26 PM by wrong_box.)

(03-07-2018, 01:59 PM)The Drifter Wrote: U.S. Steel to Restart Illinois Plant Operations Amid Trump’s Tariff Plans

United States Steel Corp. X +3.71% said it would restart a blast furnace in Illinois to handle the higher demand it expects from President Donald Trump’s proposed tariffs on foreign steel.

https://www.wsj.com/articles/u-s-steel-t...1520430223

More jobs? Pretty sure that was an intended aspect of the tariff plan...Making imported Chinese steel price to be competitive to US made steel price so more contractors will by our own steel again and employ more people...
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#3

(03-07-2018, 02:25 PM)wrong_box Wrote:
(03-07-2018, 01:59 PM)The Drifter Wrote: U.S. Steel to Restart Illinois Plant Operations Amid Trump’s Tariff Plans

United States Steel Corp. X +3.71% said it would restart a blast furnace in Illinois to handle the higher demand it expects from President Donald Trump’s proposed tariffs on foreign steel.

https://www.wsj.com/articles/u-s-steel-t...1520430223

More jobs? Pretty sure that was an intended aspect of the tariff plan...Making imported Chinese steel price to be competitive to US made steel price so more contractors will by our own steel again and employ more people...

Raising the price of steel for American manufacturers is not going to cause them to employ more people.  Quite the opposite.  They will move plants overseas to avoid the tariffs on steel imported to the US.
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#4

(03-12-2018, 07:14 AM)The Real Marty Wrote:
(03-07-2018, 02:25 PM)wrong_box Wrote: More jobs? Pretty sure that was an intended aspect of the tariff plan...Making imported Chinese steel price to be competitive to US made steel price so more contractors will by our own steel again and employ more people...

Raising the price of steel for American manufacturers is not going to cause them to employ more people.  Quite the opposite.  They will move plants overseas to avoid the tariffs on steel imported to the US.

That won't help once we're into full trade war mode.
“An empty vessel makes the loudest sound, so they that have the least wit are the greatest babblers.”. - Plato

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#5

(03-12-2018, 07:23 AM)flsprtsgod Wrote:
(03-12-2018, 07:14 AM)The Real Marty Wrote: Raising the price of steel for American manufacturers is not going to cause them to employ more people.  Quite the opposite.  They will move plants overseas to avoid the tariffs on steel imported to the US.

That won't help once we're into full trade war mode.

There are about 50,000 steel workers, and about 6 million workers at plants that use steel, so it's hard to see how raising the price of steel will be a good thing.   Good for the 50,000, but bad for the 6,000,000.   Not to mention the consumers who will have to pay more for products that contain steel.
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#6

People want jobs that pay well. People also want to pay as little as they can for goods. You can't have both.
Original Season Ticket Holder - Retired  1995 - 2020


At some point you just have to let go of what you thought should happen and live in what is happening.
 

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#7

Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?
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#8

(03-12-2018, 09:48 AM)JagNGeorgia Wrote: Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?

The tax cuts could do that, not the tariff.



                                                                          

"Why should I give information to you when all you want to do is find something wrong with it?"
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#9

(03-12-2018, 08:19 AM)The Real Marty Wrote:
(03-12-2018, 07:23 AM)flsprtsgod Wrote: That won't help once we're into full trade war mode.

There are about 50,000 steel workers, and about 6 million workers at plants that use steel, so it's hard to see how raising the price of steel will be a good thing.   Good for the 50,000, but bad for the 6,000,000.   Not to mention the consumers who will have to pay more for products that contain steel.

I think both sides are spouting a lot of hyperbole here. This is mostly a nothingburger. Most of the steel used in US manufacturing comes from either the US already, or from Canada which is exempt from the tariff. And the tariff on aluminum is only 10%. The steel and aluminum jobs added in the US will be insignificant, most of that will be done with robotics.

The tariffs will likely result in price hikes rather than job losses. A company isn't going to move its factory to another country when there might be a tariff on products made of steel and/or aluminum in the future.



                                                                          

"Why should I give information to you when all you want to do is find something wrong with it?"
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#10
(This post was last modified: 03-12-2018, 10:36 AM by The Real Marty.)

(03-12-2018, 09:48 AM)JagNGeorgia Wrote: Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?

Tariffs on imported steel raise the price of steel for every manufacturing plant in the United States that uses steel in their products.  It raises the cost of manufacturing in the United States.  So it will actually inspire foreign companies to move OUT of the US, because plants in the US will have to pay more for steel, while plants overseas will still get lower priced steel.  
 
For example, there are a lot of European and Asian car companies with manufacturing plants in the United States, but now those plants will have to pay more for steel than they used to.  This could conceivably induce them to move back overseas where they can get cheaper steel.   They have to calculate the benefit of having a factory in Tennessee or Alabama and paying a higher price for steel, vs having a plant somewhere else, paying less for steel, and importing the finished cars into the US.

It's the same with every manufacturer that uses steel in their products.  Now, not only is labor cheaper in other countries, raw materials are also cheaper in other countries.  That's even more of an inducement to move a manufacturing plant out of the United States.
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#11

(03-12-2018, 10:27 AM)MalabarJag Wrote:
(03-12-2018, 08:19 AM)The Real Marty Wrote: There are about 50,000 steel workers, and about 6 million workers at plants that use steel, so it's hard to see how raising the price of steel will be a good thing.   Good for the 50,000, but bad for the 6,000,000.   Not to mention the consumers who will have to pay more for products that contain steel.

I think both sides are spouting a lot of hyperbole here. This is mostly a nothingburger. Most of the steel used in US manufacturing comes from either the US already, or from Canada which is exempt from the tariff. And the tariff on aluminum is only 10%. The steel and aluminum jobs added in the US will be insignificant, most of that will be done with robotics.

The tariffs will likely result in price hikes rather than job losses. A company isn't going to move its factory to another country when there might be a tariff on products made of steel and/or aluminum in the future.

That's an interesting point, so I looked it up, and here's what I found: 

Most recent data shows the US produces about 81 million metric tons of steel per year. 
We import 31 million metric tons.   5 million from Canada, 3 million from Mexico.   The balance of our steel imports come almost all from Brazil, South Korea, and Turkey.   China, Germany, and Vietnam and other countries import small amounts of steel into the US. 

If you exempt Canada and Mexico, you open a huge loophole where those countries can get steel from low priced overseas countries, and import it into the US.   So you can see how policing this can get very complicated. 

China is far and away the largest producer of steel in the world, producing almost half the all the steel produced worldwide. 

I don't agree with the phrase you use "price hikes rather than job losses."   Such a choice of words implies that markets are inelastic, and don't respond to price changes.  But I think that if the prices of goods that contain steel go up, people will buy less of those products, and that will lead to job losses.  If you raise the price of cars, people will buy fewer cars.  Raise the price of air conditioners, and people postpone replacing their old unit with a new one.  It's inevitable- any kind of effective tariff results in a business slowdown.
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#12

(03-12-2018, 09:48 AM)JagNGeorgia Wrote: Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?

That's a big advantage for Mexican companies.....................their workers are already here!
When you get into the endzone, act like you've been there before.
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#13
(This post was last modified: 03-12-2018, 01:22 PM by wrong_box.)

(03-12-2018, 07:14 AM)The Real Marty Wrote:
(03-07-2018, 02:25 PM)wrong_boxto the price of US steel Wrote: More jobs? Pretty sure that was an intended aspect of the tariff plan...Making imported Chinese steel price to be competitive to US made steel price so more contractors will by our own steel again and employ more people...

Raising the price of steel for American manufacturers is not going to cause them to employ more people.  Quite the opposite.  They will move plants overseas to avoid the tariffs on steel imported to the US.
Raising the price of imported steel by tariffs is the way I read it which is why US Steel is firing up idle steel plants, which means more steel being produced in the US and more jobs...If the tariffs make the price of imported steel comparable to US produced steel more US contractors will buy the US produced steel and possibly more exports of US steel to other nations
(03-12-2018, 07:23 AM)flsprtsgod Wrote:
(03-12-2018, 07:14 AM)The Real Marty Wrote: Raising the price of steel for American manufacturers is not going to cause them to employ more people.  Quite the opposite.  They will move plants overseas to avoid the tariffs on steel imported to the US.

That won't help once we're into full trade war mode.
assuming thats what will happens and if we can export more US steel thats even better
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#14
(This post was last modified: 03-12-2018, 03:18 PM by HURRICANE!!!.)


(03-12-2018, 01:21 PM)wrong_box Wrote: Raising the price of imported steel by tariffs is the way I read it which is why US Steel is firing up idle steel plants, which means more steel being produced in the US and more jobs...If the tariffs make the price of imported steel comparable to US produced steel more US contractors will buy the US produced steel and possibly more exports of US steel to other nations
Based on your scenario above, the US consumer gets screwed.  If we're simply raising the price of imported goods via tariffs so they are higher than our domestic cost to produce similar goods, than we're simply raising the price to the US consumer.
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#15

(03-12-2018, 09:48 AM)JagNGeorgia Wrote: Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?

"Trump! What an [BLEEP]!"
"Yeah, screw that guy!"
"We'll show him! Let's get around his tariff by moving our whole company to his stupid country. See how he likes that!"
"Yeah, that'll teach him!"
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#16

(03-12-2018, 05:07 PM)TJBender Wrote:
(03-12-2018, 09:48 AM)JagNGeorgia Wrote: Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?

"Trump! What an [BLEEP]!"
"Yeah, screw that guy!"
"We'll show him! Let's get around his tariff by moving our whole company to his stupid country. See how he likes that!"
"Yeah, that'll teach him!"

"Wait, we can make an extra 2% by moving there? How can we buy some American politicians to get him to raise it more?"
“An empty vessel makes the loudest sound, so they that have the least wit are the greatest babblers.”. - Plato

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#17

(03-12-2018, 03:12 PM)HURRICANE!!! Wrote:
(03-12-2018, 01:21 PM)wrong_box Wrote: Raising the price of imported steel by tariffs is the way I read it which is why US Steel is firing up idle steel plants, which means more steel being produced in the US and more jobs...If the tariffs make the price of imported steel comparable to US produced steel more US contractors will buy the US produced steel and possibly more exports of US steel to other nations
Based on your scenario above, the US consumer gets screwed.  If we're simply raising the price of imported goods via tariffs so they are higher than our domestic cost to produce similar goods, than we're simply raising the price to the US consumer.

and just how might that be? If it costs about the same to make and sell US steel than it does to buy imported steel, most american companies would buy American steel...If american steel companies thought for one second that this was bad, they wouldn't bother to restart their foundries and start producing more steel...If you are referring to the consumer getting screwed because the price of imported steel would now be on par with the price of US steel,I don't see that...I see a trade imbalance that has gone on for years, which has been created by cheaper products made by incredibly low wage earners including children making a couple bucks a day and also a lesser quality (but mostly adequate) product...If contractors can buy a better product for a comparable price, they will and then more American steel will be sold,which adds jobs and revenue which is never a bad thing...You have a better solution to equalizing the trade imbalance?
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#18
(This post was last modified: 03-13-2018, 07:32 AM by The Real Marty.)

(03-13-2018, 01:03 AM)wrong_box Wrote:
(03-12-2018, 03:12 PM)HURRICANE!!! Wrote:
Based on your scenario above, the US consumer gets screwed.  If we're simply raising the price of imported goods via tariffs so they are higher than our domestic cost to produce similar goods, than we're simply raising the price to the US consumer.

and just how might that be? If it costs about the same to make and sell US steel than it does to buy imported steel, most american companies would buy American steel...If american steel companies thought for one second that this was bad, they wouldn't bother to restart their foundries and start producing more steel...If you are referring to the consumer getting screwed because the price of imported steel would now be on par with the price of US steel,I don't see that...I see a trade imbalance that has gone on for years, which has been created by cheaper products made by incredibly low wage earners including children making a couple bucks a day and also a lesser quality (but mostly adequate) product...If contractors can buy a better product for a comparable price, they will and then more American steel will be sold,which adds jobs and revenue which is never a bad thing...You have a better solution to equalizing the trade imbalance?

Yes, I have a better solution to equalizing the trade imbalance.  First, you have to start with the basics.  Why do we have a trade imbalance?  The reason we have a trade imbalance is because we have a huge federal budget deficit.  That may be a bit much to wrap our heads around, so let me explain. 

Normally, a trade imbalance would result in a currency valuation adjustment.   A trading partner sells us more than we sell them, so they are left holding dollars.  Normally, the dollars would be exchanged for their own currency, which puts more dollars into the currency exchange markets, and the supply-demand ratio (selling dollars for Japanese yen, for example) would cause the value of the dollar to go down, which would make our products cheaper on the world markets, and therefore we would sell more products overseas, and the trade imbalance would correct itself. 

But what is happening now is that we give our trading partners the ability to maintain the trade imbalance by selling them US government bonds, so they don't have to put the dollars they hold back into the world currency markets.  (They can buy US government bonds instead.)  This maintains the value of the dollar, and that makes imports cheap for US consumers, and that maintains the trade imbalance.  It also finances our federal debt.  This is why people keep talking about how we're borrowing money from China to finance our government.   In effect, we are.  But by selling US government debt to China (and others) the dollars they hold don't have to go on the world currency exchange, so the dollar stays strong and that makes imports to the US cheap.  

Remember, if more dollars are sold for Chinese renminbi, the value of the dollar should go down and the value of the renminbi should go up.  That's the way markets work. 

So the trade imbalance and the US government deficits are working hand in hand.  If our overseas trading partners continue to buy US government bonds instead of exchanging dollars on the currency exchange markets, the dollar stays strong and that causes imports to be cheap for US consumers, and the trade imbalance remains.   We are giving the Chinese the tools for manipulating the currency markets.  We love it when they buy our bonds and finance our deficits.   But them buying our bonds is what causes the dollar to stay strong and Chinese imports to remain cheap for us.  Because by buying US government bonds, they don't have to swap the excess dollars they hold for their own currency. 



So the way to fix the trade imbalance is to fix the deficit.  If we fix the deficit, we can stop selling US government bonds to our overseas trading partners.  Then they will have to exchange the dollars they are holding (from selling us stuff) for their own currency, the value of the dollar will decline naturally, and it'll be easier to export stuff, and imports will become more expensive. 

The trade imbalance is financing our deficits.   And the deficits are allowing our trading partners to manipulate their currencies.   That's the bottom line.   To fix the trade imbalance, fix the deficits.   We can yell at the Chinese all we want about currency manipulation, and they will respond, "We are manipulating our currency by buying your government debt.  Do you really want us to stop doing that?"  

So, that was a lot to read, and here's the executive summary: Strong dollar means cheap imports.  Overseas trading partners manipulate the currency by buying US government debt instead of exchanging dollars on the world currency exchange.  If we stop selling them US government debt, they can no longer do this.  But we need to finance our deficits, so we keep selling them US government debt.  We're doing this to ourselves!  We are causing the strong dollar, therefore, we are causing the trade deficit. Stop the deficits, and we can stop having to sell them our debt.  Then the dollar would normalize, and the trade deficit would disappear.
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#19

(03-12-2018, 09:48 AM)JagNGeorgia Wrote: Just paying devils advocate, could this inspire foreign companies (that do a lot of US-specific business) to move into the US to avoid taxes?

Companies cannot just pick up and move (due to facility ownership and/or lease commitments) and additionally, some may be skeptical to plan it long term since it really does appear that there is a serious potential that Administrative Changes every 4 years can simply reverse what's been done by the prior Administration.  Thus, foreign companies must have the foresight that a Democratic President and Congress could do in 2020 (or even 2024).

I like some out-of-the-box thinking that Trump brings to the table; provided, our economy doesn't take huge hits due to global investor concerns (e.g. Dow, etc.)
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#20

(03-13-2018, 06:37 AM)The Real Marty Wrote:
(03-13-2018, 01:03 AM)wrong_box Wrote: and just how might that be? If it costs about the same to make and sell US steel than it does to buy imported steel, most american companies would buy American steel...If american steel companies thought for one second that this was bad, they wouldn't bother to restart their foundries and start producing more steel...If you are referring to the consumer getting screwed because the price of imported steel would now be on par with the price of US steel,I don't see that...I see a trade imbalance that has gone on for years, which has been created by cheaper products made by incredibly low wage earners including children making a couple bucks a day and also a lesser quality (but mostly adequate) product...If contractors can buy a better product for a comparable price, they will and then more American steel will be sold,which adds jobs and revenue which is never a bad thing...You have a better solution to equalizing the trade imbalance?

Yes, I have a better solution to equalizing the trade imbalance.  First, you have to start with the basics.  Why do we have a trade imbalance?  The reason we have a trade imbalance is because we have a huge federal budget deficit.  That may be a bit much to wrap our heads around, so let me explain. 

Normally, a trade imbalance would result in a currency valuation adjustment.   A trading partner sells us more than we sell them, so they are left holding dollars.  Normally, the dollars would be exchanged for their own currency, which puts more dollars into the currency exchange markets, and the supply-demand ratio (selling dollars for Japanese yen, for example) would cause the value of the dollar to go down, which would make our products cheaper on the world markets, and therefore we would sell more products overseas, and the trade imbalance would correct itself. 

But what is happening now is that we give our trading partners the ability to maintain the trade imbalance by selling them US government bonds, so they don't have to put the dollars they hold back into the world currency markets.  (They can buy US government bonds instead.)  This maintains the value of the dollar, and that makes imports cheap for US consumers, and that maintains the trade imbalance.  It also finances our federal debt.  This is why people keep talking about how we're borrowing money from China to finance our government.   In effect, we are.  But by selling US government debt to China (and others) the dollars they hold don't have to go on the world currency exchange, so the dollar stays strong and that makes imports to the US cheap.  

Remember, if more dollars are sold for Chinese renminbi, the value of the dollar should go down and the value of the renminbi should go up.  That's the way markets work. 

So the trade imbalance and the US government deficits are working hand in hand.  If our overseas trading partners continue to buy US government bonds instead of exchanging dollars on the currency exchange markets, the dollar stays strong and that causes imports to be cheap for US consumers, and the trade imbalance remains.   We are giving the Chinese the tools for manipulating the currency markets.  We love it when they buy our bonds and finance our deficits.   But them buying our bonds is what causes the dollar to stay strong and Chinese imports to remain cheap for us.  Because by buying US government bonds, they don't have to swap the excess dollars they hold for their own currency. 



So the way to fix the trade imbalance is to fix the deficit.  If we fix the deficit, we can stop selling US government bonds to our overseas trading partners.  Then they will have to exchange the dollars they are holding (from selling us stuff) for their own currency, the value of the dollar will decline naturally, and it'll be easier to export stuff, and imports will become more expensive. 

The trade imbalance is financing our deficits.   And the deficits are allowing our trading partners to manipulate their currencies.   That's the bottom line.   To fix the trade imbalance, fix the deficits.   We can yell at the Chinese all we want about currency manipulation, and they will respond, "We are manipulating our currency by buying your government debt.  Do you really want us to stop doing that?"  

So, that was a lot to read, and here's the executive summary: Strong dollar means cheap imports.  Overseas trading partners manipulate the currency by buying US government debt instead of exchanging dollars on the world currency exchange.  If we stop selling them US government debt, they can no longer do this.  But we need to finance our deficits, so we keep selling them US government debt.  We're doing this to ourselves!  We are causing the strong dollar, therefore, we are causing the trade deficit. Stop the deficits, and we can stop having to sell them our debt.  Then the dollar would normalize, and the trade deficit would disappear.

Stop the deficits? Good luck with that. Not with these buy and spend Republicans/populists in office. No one is looking long term, which your analysis requires. In the long term they'll all be dead.

There are no "small government conservatives" anymore. They sold out to Trump.
The sun's not yellow, it's chicken.
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