WTF Does a Privileged Suit Know About Steel?

What does this man of debt-leveraged real estate know about the factory floors he visits and delivers protectionist bromides to? Congratulations Trump, you just made an attempt to impair US manufacturing and as a humorous bonus, put a crap load of greedy traders off sides as they momo’d steel companies yesterday and get hammered today.

As usual, you can click the headline for the article.

U.S. Steel Corp. and Nucor Corp., the largest U.S. steelmaker, paced losses on the Bloomberg Americas Iron/Steel Index. Among aluminum companies Chicago-based Century Aluminum Co. and Kaiser Aluminum Corp. fell more than 1 percent.

“There’s disbelief that this actually goes through in its current form, given backlash from members of Congress, economists, and the decline in the stock market yesterday,” Lee McMillan, a steel analyst at Clarksons Platou Securities Inc., said by telephone. “The other concern is about demand destruction.”

Demand won’t be destroyed. But there is a case that it could shift from US manufacturers of finished goods to foreign ones. There are work arounds to the tariff like buying finished products overseas (increasing demand for foreign products), which are not subject to the tariff that their raw materials are. In essence the scheme is designed to protect the prices of US producers of certain raw materials and not subject them to global demand. It does nothing for US manufacturing other than potentially hurt.

As for any cost increases that may result, a reminder from this post after January’s ISM. Here’s a screenshot of the readings and my thoughts above and below the graphic.

But it’s a complicated scheme they’ve got going here and it seems full of potentials for unintended consequences. Then again, we have a privileged suit unilaterally making US manufacturing policy.

Daddy put Trump in business and he knows nothing about modern manufacturing. It’s almost like he read this shit in a trade manual or textbook from 1973. The future is automation, robotics and global manufacturing (including the US). The US steel makers that can compete will, and the rest won’t. I realize that just as with the coal miners, there are real people employed in these dying industries and that needs to be addressed. But going backwards to deliver populist policy of a long-gone era is strictly political and it’s pretty stupid to boot.

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