With all of the bureaucratic and political controversy in Washington lately, there are several good news stories that aren’t getting the attention they deserve. Recent reports heralding the American steel industry’s budding resurgence provide plenty of evidence that the Trump’s best bet is a full focus on the economy.
Trump’s Make America Great Again Campaign talk combined with a promise to reduce regulations, promote the use of U.S.-made industrial products and reconfigure trade deals to the benefit of American manufacturing have plants around the country feeling extremely optimistic.
Such is the gist of a report out from The New York Times Thursday detailing the a massive turnaround currently occurring in the iron and steel industry.
From the report:
Across the steel industry, stock prices — and spirits — have been on the rise, lifted by President Trump’s vow to protect American manufacturers against cheaper imports and invest as much as $1 trillion in infrastructure over the next decade.
“If you could design a perfect administration from the perspective of the steel industry, this would be it,” said Thomas Gibson, president of the American Iron and Steel Institute, ticking off the president’s promises to hack away regulations and lower taxes, while fending off foreign competitors and embarking on a “Buy America” building program.
Even before a single presidential vote was cast, American steel makers had been buoyed last year by record automotive sales and a series of penalties slapped on foreign producers like China for illegally dumping subsidized steel in the United States. “We expect our sheet and plate steel mills will benefit from trade actions taken over the last year,” said John Ferriola, Nucor’s chief executive.
Mr. Ferriola, one of the business leaders who met with Mr. Trump at the White House in February to discuss American manufacturing, is looking for further improvements. “We believe our full year 2017 could significantly exceed the level achieved for 2016,” he said, noting that “imports and inventories are down.”
This, to borrow one of Trump’s favorite words, is tremendous news.
The iron and steel industry in the U.S. provides hundreds of thousands of American jobs. But regulations imposed by the Obama administration combined with the former president’s unwillingness to take on unfair trade policies have in recent years led to devastating layoffs.
Last year, President Barack Obama lied to the American public, claiming that the job losses are due to a reduced need for American steel.
“This nostalgia about an era when everybody was working in manufacturing jobs, and you didn’t need a college degree, and you could go in and as long as you worked hard you could support a family and live a middle-class life — that has been undermined far more by automation than it has been by outsourcing or the shift of jobs to … low-wage countries,” Obama said. “I mean, the steel industry is producing as much steel in the United States as it ever was. It’s just (that) it needs one-tenth of the workers that it used to.”
Again, that was a bold-faced lie.
As Politifact later noted: “In reality, production is down by more than one-third from its historical peak in 1973, and the employment picture — while still severely shrunken — is down to about one-fifth of its 1950s level, rather than one-tenth. We rate the claim False.”
So contrary to Obama’s ivory tower bullshitting, there is plenty of room for jobs that pay well and provide health and retirement benefits to workers willing to sweat in steel plants.
What has severely handicapped the industry’s ability to make those jobs available is the illegal dumping of cheap Chinese steel into U.S. markets. Lack of environmental regulation in China and little value for the lives of industry workers in the country make the cheap production possible.
As President Obama attempted desperately to create a legacy for his administration, he pushed an environmental agenda that focused on eliminating pollution at all costs– even when that meant devastating industries that make up much of the backbone of the U.S. economy.
In an effort to offset the job-killing effects of his regulatory policies, the president attempted to create new economic drivers in clean energy via massive public investment into upstart alternative energy projects. Unfortunately, the president’s wager that he could replace dirty jobs in mills and coal plants was prefaced partially on the idea that Americans would be willing to pay more for less efficient energy products thanks to rolling environmental fear mongering.
Meanwhile, Obama’s affection for the third-world encouraged trade policies that would allow producers in places where no such care for the environment currently exists.
Markets responded to price hikes on American products by doing what markets do.
Obama, of course, didn’t start the U.S. manufacturing decline– it had been occurring slowly for years as American companies were increasingly squeezed by politicians and bureaucrats who pushed suicidal trade deals and punishing environmental policies.
If there’s one thing that Trump realizes more than probably most any other elected official in Washington today is that economies don’t run on altruism.
Even Hillary Clinton unintentionally highlighted the president’s business acumen prior to Trump’s election when she noted during a debate that the the businessman had used Chinese steel in his own development projects.
It was supposed to be a dig to indicate that Trump is a hypocrite for calling on Americans to buy American. But it was just good business.
If the U.S. government makes American steel production more expensive via regulation while failing to prevent the domestic market from being flooded with cheap Chinese steel, produced at a massive human and environmental cost due to near total lack of meaningful regulation, U.S. developers would be majorly shirking there fiduciary duty to investors buying the more expensive American product.
Trump’s plan to improve the American steel industry would make it possible for U.S. construction planers to maintain that duty to investors while purchasing American steel by doing two things. First, via diplomacy and economic maneuvers like tariffs and punitive actions against the Chinese government for market manipulation, his administration will make Chinese steel more expensive in the U.S. market. The price of domestically produced iron and steel, meanwhile, should fall as the president’s already rolling efforts to weaken draconian environmental regulations which drive up the costs of energy for plants and burden U.S. producers with massive fines and costly downtime for even the slightest failures to comply.
Free market advocates may not like the idea of making trade more difficult for Chinese steel– but in dealings with a country whose economy certainly doesn’t operate in a manner friendly to market freedom, compromises are necessary.
In much the same way, small government advocates aren’t thrilled about Trump’s plan to spend heavily on infrastructure projects. But the spending but the plan will certainly be a shot in the arm for American industry if the president is successful in weakening China’s ability to undercut the producers here.
Controversy currently underway in Washington is slowing Trump’s agenda. But as the growing list of issues making it difficult for the president to roll out his Make America Great Again plan– at least where it concerns the economy– new employment opportunities throughout the nation are certain to take the wind from the sails of many of Trump’s most vehement critics.