Interested in another positive that resulted from Donald Trump Presidency?
The Chicago Tribune article titled, US Steel investing 750 million in the plant, reports a major revitalization to their flagship Gary plant. This undoubtedly is the result of both the corporation tax reduction and steel tariffs on foreign steel. The long-range benefits that will result over time will benefit trade imbalance, benefit worker, US Steel, and reduce the cost and competitiveness of USA steel producers.
The purpose of this post is to give you an insight of how foreign steel manufacturers were able to make and export steel across oceans and sell at lower costs than USA Steelmakers. It was not labor cost differences which usually are the main factor in imported products sent into the USA.
King Solomon
Do you see someone skilled in their work? They will serve before kings; they will not serve before officials of low rank. (Proverb 22:29)
Excerpt
“he shall stand before kings; he shall not stand before mean men, or “obscure persons” (o); he shall not continue in the service of ignoble persons, or keep company with them; but he shall be taken into the service of princes and noble men, and be admitted into their presence,
What’s My Point?
One major factor why US steel cost more than foreign steel is foreign steel mills are more modern and productive than USA steel mills. Why that came about was two reasons. The first was after WWII, new modern more productive and new steel making technology steel mills were built in foreign countries while USA mills were not.
The second reason why is because US steel mills being had to produce profits for shareholders and were never subsidized by the USA government whereas many foreign steel mills received government financing. When the USA had to face the foreign competition of lower prices, they had to reduce prices which made less money available for major investments such as the reported 750 million dollars announced by US Steel.
My point is over time, if all US Steel mills do the same type investments, the USA steel manufactures will become more productive and price completion will come into play between USA steel producers.
In other words, manufacturing steel requires long-range government planning and tax incentives to allow steel manufactures to make investments. The USA politicians do not think long term about anything other than getting re-elected.
In My Opinion
Most people who are complaining about tariffs do not understand manufacturing. They still believe in the failed economic policies that were taught to them which result in the decimation of US manufacturing and loss of millions of livable wage jobs for middle-class Americans.
President Trump is no politician and frequently complains about USA trade agreements made by politicians were unfair to American workers.
American workers know this and that is why they voted for President Trump.
Thank You, President Trump, for fulfilling your campaign promises to renegotiate unfair trade agreements and to return manufacturing jobs to the USA.
If Interested
Read previous posts in the Source Links below that pertain to steel manufacturing.
Regards and good will blogging.
Chicago Tribune
http://www.chicagotribune.com/business/ct-biz-us-steel-tariffs-gary-plant-20180816-story.html
Wise Use of Steel Tariff Profits
https://rudymartinka.com/2018/03/29/king-solomon-diligent-wise-use-of-steel-tariffs-profits/
Trade Wars Wisdom
https://rudymartinka.com/2018/03/22/king-solomon-trade-wars-wisdom-of-right-side-of-history/
King Solomon Proverb Excerpt
https://biblehub.com/commentaries/gill/proverbs/22.htm
Previous Post Score One
https://rudymartinka.com/2018/08/18/king-solomon-praise-and-thanks-president-trump-score-one/
A couple points here before you elevate Trump to sainthood….
1. You said it yourself.. Trump is no politician hence he has no experience nor inclination this late in life to even understand politics. He is also a real estate man and entertainment promoter, and self-made branding “expert” on the side, and has absolutely no experience nor interest in any other facets of the economy. He just “thinks” he needs to slap tariffs.
2, You said he has renegotiated trade agreements. Well, he’s pretty much “renegotiated” very little.. he simple walks away from existing trade agreements and/or slaps tariffs willy-nilly.
3, The primary reason manufacturing jobs dried up was because of greater use of automation internationally forced greater competition and lower market prices outside our borders. The simple fact that U.S. Steel is spending all this money in Gary is, in fact, to modernize and make more efficient in order to sell more competitively on the open markets. … presumably. Maybe they should have done this long ago to try and “save” those jobs?
4. Other than that southern Illinois steel plant re-opening and creating 500 jobs… U.S. Steel has no immediate plans to hire anyone for the Gary operation until they see what the tariffs do. In other words……………… no one absolutely knows the exact ramifications of Trump’s imposed tariffs, other than of course, the threat of the inevitable trade wars. We already know Trump has NO idea what HE is doing. But is sure looks good for photo ops to make his base think he’s making America great again.
Yeah.. I’m truly psyched at all the “good” this guy is doing for the country!
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@Doug
Thanks for your comment. Perhaps I need to explain better using critical thinking techniques to reply to your comments.
1. Because Trump is no politician, II voted for him. Our country is 20 trillion dollars in debt because of the political decisions made by Clinton, (bad trade deals), Bushes (wars), Obama, (unlimited spending on liberal programs to benefit everyone in the world except the USA middle class taxpayers.)
2. As for renegotiation trade agreements, Obama promised to do the same when he campaigned in his first term and instead of renegotiating NAFTA as he promised, he negotiated the South Korean trade pact which was supposed to add 70,000 USA jobs and wound up losing 70,000 USA jobs.
3. Automation adds tech high paying jobs to engineer, maintain, and program machinery to lower widget costs. The countries that sent USA manufacturing jobs outside the USA gave all the technical expertise paid for by USA taxpayers in the form of Research and Development tax breaks, free to foreign manufacturers such as China. While at the same time every machine manufacture who makes automatic machines are no long manufactured in the USA.
In response to your remark, “Maybe they (US steel companies should have done this long ago to try and “save” those jobs?” perhaps I need to explain how the USA helped foreign countries more than USA countries build better steel making (automated) at USA taxpayers expense and did not do the same to help USA steel plants modernize their plants.
After WWII, the USA Congress passed the Marshall Plan to help war torn countries rebuild their bombed-out steel plants. 13 billion dollars, or 100 billion dollars in today’s money value was given to countries who wisely used it to build more modern steel plants than the USA plants and equipment.
Over time steel was exported to USA and foreign countries subsidized steel costs, or used dumping steel price tactics or currency manipulation practices, or bought up us steel companies to gain market share and use customers,
USA companies had to lower prices which resulted in less money to invest to modernizes USA steel facilities. In other words, the USA subsidized foreign steel makers and not USA countries. If you ever were in business, you would know than banks wont loan money to companies that have low profit margins and no long-term way to pay back loans to modernizes plants and equipment.
Trumps tax cuts and tariffs will result in allowing USA steel makers to modernized USA steel plants
. I won’t go into the environmental requirements the USA steel companies have to meet while China steel suppers do not and now have people walking around the streets with masks.
As for Saint Louis adding 500 jobs, that makes 500 families be taken off USA food stamps, and a host of other USA social benefits paid by taxpayers.
Incidentally, one of the things taught in Critical Thinking courses is to recognize personal bias which prevent critical thinking.
Regards and good will blogging.
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Jeez, Rudy… anything I reply to you ends up taking four times as much space. Just to reply yo u here has ended up two pages and I’m not finished. LOL.. critical thinking can be a bitch. 🙂
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Daoug
Be careful you don’t blow a fuse while in operation of your critical thoughts.
Regards and good will blogging.
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