Wednesday, November 28, 2018

Yeah, except....

Yeah, except:

Construction isn't expected to begin until 2020, and the full $1.7 billion or $1.8 billion won't be spent before operations commence "in the second half of 2021." However, investors aren't waiting around to punish Steel Dynamics for investing in a steel market subject to apparently arbitrary price and demand swings at the whim of a president's trade war.

As much as I hate to say it, I can't really blame investors for their reaction. 2020-21 is right around the time the next U.S. presidential election could upend the system of steel tariffs that's currently making it a bit more attractive to make domestic steel investments such as the one Steel Dynamics just announced. What's more, there's a risk those tariffs could vanish even sooner, re-flooding U.S. metals markets with a torrent of cheap Chinese steel, should President Trump strike the right trade deal with China before his term expires.

It's sad to say, but in times of uncertainty like these, it doesn't always pay to invest in the future.

Trump was referring to President Lyndon B. Johnson's decision in 1964 to impose a 25% tariff on light trucks coming into the US. That was a response to a 50% German tariff on some chicken coming from the US. The tariff became known as the "chicken tax" on trucks.

While tariffs Johnson introduced on other goods (potato starch, brandy, and dextrin) were dropped, the restriction on trucks has persisted over the past half-century and helped US automakers hold a dominant market share on truck sales.
If Trump does go through such a move, it would most likely cause a huge amount of damage to the US economy.

A study from the Peterson Institute of International Economics found that a 25% auto tariff would cause auto production in the US to fall by 1.5% over three years and result in a net loss of 195,000 jobs in that same time frame.

Similarly, a study by the Center for Automotive Research found an auto tariff would boost the average cost of a car by $4,400 for American consumers. The study found that auto sales would fall by 2 million a year and shave nearly $60 billion off gross domestic product.
Not being a fan of GM, I want to say "Good on ya!" for Trump not being a fan, either.  But I can't.  Not least because Trump's tariffs are already going to drive up prices, and that doesn't help manufacturers or consumers:

GM said last month that it expects to spend $1 billion more next year on commodities such as steel and aluminum. While those tariffs are already in effect, GM has long-term supply contracts that locked in lower prices. But by next year the higher market prices will start to raise its costs, even from domestically-produced steel and aluminum, since those US mills no longer have to compete with lower-priced imports.
Yeah, except that story is about Canadian government assistance, not the U.S. government.  As head of the government, we kind of expect our President to know this, although these days we pretty much don't.

Treason against the United States, shall consist only in levying war against them, or in adhering to their enemies, giving them aid and comfort. No person shall be convicted of treason unless on the testimony of two witnesses to the same overt act, or on confession in open court.

Not sure how you get there from here, even in the wildest flights of fancy.  Again, you kind of expect the head of the government to understand things like this, but then again, these days you don't.

(What?  It's not Advent yet!)

*no, it's not a proven lie, either; but when the President tweets about treason, you pretty much have an obligation to pay attention to that.


  1. This reminds me that that huge pile of aluminum that I was going to recycle is still in my shed. My brother and sister-in-law talked me into keeping it to see if Trump's idiocy managed to make the price of scrap metal skyrocket. You'll know I'm rich because I'll get a proof reader.

    I wish things would crash before Democrats take control of the House, but there's a crash coming.

    1. Saw a story lat night about grain elevators full if soybeans because the Chinese market us closed (and may, before long, be lost). Market price if soy has collapsed below production costs, crops are now rotting in the fields.

      The "crash" is here.

  2. Apologies for typos, forced to comment on my phone. I don't proof carefully enough there.

  3. I once had a libraray meeting in someones' spotless house, she was apologetic that she hadn't had time to vacuum. "You vaccuum?" I said.

    The only thing proved by my proofing is that I've got old eyes.