Noah, good piece. However, even before Section 232 tariffs were imposed by the Trump administration, there were some very significant steel import tariffs imposed via the USITC in the forms of antidumping and countervailing duties. Are you against steel tariffs even if they are driven by foreign dumping/state subsidies? Additionally, I'm curious how your view on steel tariffs dovetails with your environmental/CO2 views. If, say, Chinese steel mills have much lower pollution/CO2 regulations than mills in the US or Europe, is it "fair" to allow steel buyers to buy foreign steel at the same price as domestic? Doesn't this just "export" our pollution and CO2 issues abroad at the expense of domestic industry?
I'm with List on this. Taxing steel only makes sense if you really, really want to have a steel industry even if it costs you. When steel making was a rapidly growing industry, it made sense to have steel tariffs to protect a strategically important industry. If you were worried about having to fight a war, you could justify this on military grounds as well as economic grounds. If it isn't about war and it isn't about protecting a new industry, steel tariffs don't make sense.
Subsidies on Steel,by the USA,will be a tool,to boost export of downstream steel users - which is a prime reason for importers of downstream US steel based products (id.est., nations like Nippon), to impose CVD,ADD and Safeguard Duty,on US exports of Autos etc.If the US contests the ADD in WTO,then other nations exporting to the US,will adopt the same model for other basic materials,used in downstream products - exported to the US.
Net Result,will be a disaster for global trade.
The world loves US farm subsidies,as it provides an excuse to block US food grain imports (like Nippon),and also keeps food prices low,lowers basic food grain prices,so that nations can make US procurements at low rates,and global inflation to the extent of grain prices,is minimised.It also increases the global net purchasing power,in the hands of the populace of the world.
If Steel subsidies are exported by Steel companies - it will destroy the global steel market,and every nation will impose,CVD,ADD etc.
If Subsdies on steel are not exported,then the subsidy will need to be,on a per grade basis,which will benefit the large steel units,and those with efficiencies in operations.There will be no incentive for steel users in the USA,to import steel,as the local market will be more remunerative. If the US exits the steel import market - steel prices will crash - and the downstream steel users,in Nippon,PRC,Mexico,EU will also get steel cheaper - and so,the benefit of lower steel prices to downstream US steel users (via subsidies), will be lost (which is contrary to the aims,of the US Steel subsidy).
It might even outprice US Downstream steel product exports,with consequent loss of exports and loss of export market share - for a long time.
Subsidies to US steel,will lead to replicating action,by all nations in varied sectors,so long as they can afford the subsidies,and the cost of WTO litigations.
Lastly,how does import duty on steel imports into the US,hurt the exports of downstream steel product exports,from the USA ? Steel imported by steel users,for making steel based products, which are to be exported - can be imported free of duty,or subject to duty drawback.
US Steel exports involves,spreading the poison among Americans - for the benefit of Nippon etc.The Steel value chain,from mining to production, involves carbon emission and digging out the poison from the earth.Y should US swallow this poison pill,for the benefit of 3 rd nations,who import steel ? If US exits the steel export market,in theory,global steel prices will rise,to bury the downstream steel users,outside the US.dindooohindoo
The decision to impose duty on steel imports in the US,should be based on the rise in the Marginal and Total cost of steel in the US vis-a-vis competition,BEYOND A TOLERANCE,versus the jobs in the downstream steel users market in the USA.If there are jobs,there will be supply and demand.If there are no jobs,there MAY be NO steel demand.The impact on exports of steel or steel based products,is irrelevant (As for those segments,steel can be imported at Nil Duty)
Excellent article as always. I suspect most tariffs come from political rather than economic reasons or from a misguided belief that the basis of international trade is to one-up your trading partners. Paul Krugman discusses similar fallacies in Pop Internationalism. With regard to a VAT, howeber, taxing consumption usually ends up punishing those who do the most consumption, who are often not the wealthy.
If you subsidise enough to make the US competitive with lower labour cost countries, and they do their own subsidies to undercut you, would it then make sense to put tariffs on them?
Would you please write about the reason college prices have risen much faster than inflation over the past 20 years? Same for medical prices.
"few Americans even pause to think about farm subsidies."
Excuse me, but this was the video that made me a libertarian back in HS
https://www.youtube.com/watch?v=VBZgyaA9Ryw
Noah, good piece. However, even before Section 232 tariffs were imposed by the Trump administration, there were some very significant steel import tariffs imposed via the USITC in the forms of antidumping and countervailing duties. Are you against steel tariffs even if they are driven by foreign dumping/state subsidies? Additionally, I'm curious how your view on steel tariffs dovetails with your environmental/CO2 views. If, say, Chinese steel mills have much lower pollution/CO2 regulations than mills in the US or Europe, is it "fair" to allow steel buyers to buy foreign steel at the same price as domestic? Doesn't this just "export" our pollution and CO2 issues abroad at the expense of domestic industry?
Well done Noah. Are there rigorous criteria for what counts as a final good? I can imagine this being skirted.
Also, have you written anything about fusion before? It's a cool futurist topic, a la Tyler Cowen's recent, highly imaginative bloomberg piece https://www.bloomberg.com/opinion/articles/2021-11-11/nuclear-fusion-is-close-enough-to-start-dreaming-of-a-new-world. I think your take would be cool re: some of the topics you frequently write about (disruptive tech innovation, climate change, energy, geopolitics, etc).
I'm with List on this. Taxing steel only makes sense if you really, really want to have a steel industry even if it costs you. When steel making was a rapidly growing industry, it made sense to have steel tariffs to protect a strategically important industry. If you were worried about having to fight a war, you could justify this on military grounds as well as economic grounds. If it isn't about war and it isn't about protecting a new industry, steel tariffs don't make sense.
Subsidies on Steel,by the USA,will be a tool,to boost export of downstream steel users - which is a prime reason for importers of downstream US steel based products (id.est., nations like Nippon), to impose CVD,ADD and Safeguard Duty,on US exports of Autos etc.If the US contests the ADD in WTO,then other nations exporting to the US,will adopt the same model for other basic materials,used in downstream products - exported to the US.
Net Result,will be a disaster for global trade.
The world loves US farm subsidies,as it provides an excuse to block US food grain imports (like Nippon),and also keeps food prices low,lowers basic food grain prices,so that nations can make US procurements at low rates,and global inflation to the extent of grain prices,is minimised.It also increases the global net purchasing power,in the hands of the populace of the world.
If Steel subsidies are exported by Steel companies - it will destroy the global steel market,and every nation will impose,CVD,ADD etc.
If Subsdies on steel are not exported,then the subsidy will need to be,on a per grade basis,which will benefit the large steel units,and those with efficiencies in operations.There will be no incentive for steel users in the USA,to import steel,as the local market will be more remunerative. If the US exits the steel import market - steel prices will crash - and the downstream steel users,in Nippon,PRC,Mexico,EU will also get steel cheaper - and so,the benefit of lower steel prices to downstream US steel users (via subsidies), will be lost (which is contrary to the aims,of the US Steel subsidy).
It might even outprice US Downstream steel product exports,with consequent loss of exports and loss of export market share - for a long time.
Subsidies to US steel,will lead to replicating action,by all nations in varied sectors,so long as they can afford the subsidies,and the cost of WTO litigations.
Lastly,how does import duty on steel imports into the US,hurt the exports of downstream steel product exports,from the USA ? Steel imported by steel users,for making steel based products, which are to be exported - can be imported free of duty,or subject to duty drawback.
US Steel exports involves,spreading the poison among Americans - for the benefit of Nippon etc.The Steel value chain,from mining to production, involves carbon emission and digging out the poison from the earth.Y should US swallow this poison pill,for the benefit of 3 rd nations,who import steel ? If US exits the steel export market,in theory,global steel prices will rise,to bury the downstream steel users,outside the US.dindooohindoo
The decision to impose duty on steel imports in the US,should be based on the rise in the Marginal and Total cost of steel in the US vis-a-vis competition,BEYOND A TOLERANCE,versus the jobs in the downstream steel users market in the USA.If there are jobs,there will be supply and demand.If there are no jobs,there MAY be NO steel demand.The impact on exports of steel or steel based products,is irrelevant (As for those segments,steel can be imported at Nil Duty)
Excellent article as always. I suspect most tariffs come from political rather than economic reasons or from a misguided belief that the basis of international trade is to one-up your trading partners. Paul Krugman discusses similar fallacies in Pop Internationalism. With regard to a VAT, howeber, taxing consumption usually ends up punishing those who do the most consumption, who are often not the wealthy.
lol this is hilarious
"when we put a tax on imported steel, our own steelmakers raise their prices too"
I guess all taxes should just be abolished then
Its great to have Ore, but you can trade for it with wheat and sheep
Nice article Noah, but probably way too logical for politicians.
Ps: Vela passed on he subscribed.
What if everyone subsidises steel...
If you subsidise enough to make the US competitive with lower labour cost countries, and they do their own subsidies to undercut you, would it then make sense to put tariffs on them?