Tariffs: Subsidies for Outcompeted Industries
Another trade-centric "news"letter!
Struggling industries often choose to lobby government for protectionism rather than to adapt their business practices. So, at the behest of flagging American metal producers, the Biden administration recently announced new anti-dumping duties on tinplate (the metal from which manufacturers make food cans and other products).
This author discussed the American tinplate industry’s woes — which did not stem from foreign dumping, and which the announced tariffs will not ameliorate — in a blog post:
The Biden administration predicated these new duties on a finding that “imports of tin mill products…are being unfairly priced, i.e., dumped, into the U.S. market.” However, the investigation has proceeded far better for free trade than it seemed poised to. Commerce largely rebuffed Cleveland-Cliffs and the United Steelworkers petitions. It declined to impose antidumping duties on five of the eight total countries it investigated, and the announced rates stand well below maximum rate the petitioners sought.
Fretting about unfair pricing and product dumping greatly distorts the tin-mill industry’s status quo. This debacle reflects, rather, the unsavory sway economically interested groups attempt to exert over U.S. trade policy.
The American tin-mill industry’s travails stem less from foreign competitors – who seek merely to provide useful goods to eager consumers stateside – than overall market conditions and Trump-era tariffs on components of tin-mill such as so-called “blackplate.” Following the latter’s imposition, the tin-mill industry (staggered by inflated input costs) cratered. Domestic capacity to manufacture tin-mill products wilted by 25 percent from 2017 (the year prior to the tariffs’ imposition) to 2022, during which period imports rose by 17 percent.
The Wall Street Journal (WSJ) reports that can makers and food companies, on whom the announced tariffs’ costs will largely fall, protest that “tin-mill imports have increased because U.S. steelmakers don’t meet their needs, not because of cheap foreign products.” WSJ adds that “They said Cleveland-Cliffs doesn’t produce the tin-mill for the most popular type of products: two-piece cans that are stackable and sturdier and can accommodate easy-open tops.”
Read the full analysis here.
Some Wisdom
The following passage from Adam Smith’s The Wealth of Nations seems fresh as ever.
In every country it always is and must be the interest of the great body of the people to buy whatever they want of those who sell it cheapest. The proposition is so very manifest that it seems ridiculous to take any pains to prove it; nor could it ever have been called in question had not the interested sophistry of merchants and manufacturers confounded the common sense of mankind. Their interest is, in this respect, directly opposite to that of the great body of the people. As it is the interest of the freemen of a corporation to hinder the rest of the inhabitants from employing any workmen but themselves, so it is the interest of the merchants and manufacturers of every country to secure to themselves the monopoly of the home market.
Hence in Great Britain, and in most other European countries, the extraordinary duties upon almost all goods imported by alien merchants. Hence the high duties and prohibitions upon all those foreign manufactures which can come into competition with our own. Hence, too, the extraordinary restraints upon the importation of almost all sorts of goods from those countries with which the balance of trade is supposed to be disadvantageous; that is, from those against whom national animosity happens to be most violently inflamed.
Some Beauty
In Vergil’s Aeneid, the protagonist, Aeneas, describes to Dido the fall of Troy. John Dryden’s translation is magnificent.
Aeneas says:
"Fear broke my slumbers; I no longer stay, But mount the terrace, thence the town survey, And hearken what the frightful sounds convey. Thus, when a flood of fire by wind is borne, Crackling it rolls, and mows the standing corn; Or deluges, descending on the plains, Sweep o’er the yellow year, destroy the pains Of lab’ring oxen and the peasant’s gains; Unroot the forest oaks, and bear away Flocks, folds, and trees, an undistinguish’d prey: The shepherd climbs the cliff, and sees from far The wasteful ravage of the wat’ry war. Then Hector’s faith was manifestly clear’d, And Grecian frauds in open light appear’d. The palace of Deïphobus ascends In smoky flames, and catches on his friends. Ucalegon burns next: the seas are bright With splendor not their own, and shine with Trojan light New clamors and new clangors now arise, The sound of trumpets mix’d with fighting cries. With frenzy seiz’d, I run to meet th’ alarms, Resolv’d on death, resolv’d to die in arms, But first to gather friends, with them t’ oppose (If fortune favor’d) and repel the foes; Spurr’d by my courage, by my country fir’d, With sense of honor and revenge inspir’d."
Some Levity
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Sean Strickland is living the American dream.