Tags

, , , , , , , , , ,

As known by readers of RealityChek, President Trump’s tariffs on metals have worked out impressively since their imposition in March, 2018. Specifically, domestic output in tariff-ed steel and aluminum has rebounded impressively, and employment has increased, too. Price inflation has been contained. And partly as a result, production and hiring in the metals-using sectors widely predicted to become major victims of these levies generally have outperformed that of the rest of American industry.

But looking at steel production around the world provides additional evidence of the tariffs’ success – and especially of the administration’s widely assailed decision to apply them across-the-board (which numerous product-specific exemptions to be sure) rather than confine them to China. President Trump’s critics argued (correctly) that it was China whose bloated, government-subsidized output was mainly responsible for distorting global steel trade flows and output patterns.

But the Trump administration and domestic steel producers justified the comprehensive approach by claiming that many other steel-making countries were compensating for Chinese pressure on their own steel sectors by ramping up their exports to the wide open U.S. market, or permitting Chinese steel to be sent to the United States after passing through their ports, or some combination of the two (a practice known as transshipment).

The evidence for success on this crucial front comes from the World Steel Association (WSA), an international industry group that claims its members combine to turn out 85 percent of global output. (So there’s no reason to suppose that its findings are unduly influenced by the tariff-supporting domestic U.S. steel sector.)

Each month, the WSA releases steel output data (in volume terms) for 64 countries that it claims account for 99 percent of world production. And as you can see from the table below (calculated from the statistics found here), a stunning change has taken place in global output patterns since the American tariffs’ onset.

Chiefly, the month before the tariffs began, both Chinese steel production and global steel production were both growing considerably faster than America’s on a year-on-year basis. This past February (the last month for which data is available), Chinese output was still outgrowing the world’s as a whole – but so was U.S. steel production.

And as is evident, the American industry has consistently outperformed its collective global counterpart – as well as Chinese steel-makers for the most part – for several months. The clear implication: Because the tariffs have been worldwide in scope, they’ve shut down opportunities for other countries to cope with the China problem at America’s expense.

The figures also demonstrate that Chinese steel output remains feverish despite Beijing’s numerous promises of restraint and capacity cuts. But as long as the other steel-producing countries – many of which are clearly getting squeezed as a result – keep foot-dragging on cooperative efforts to end the Chinese world steel glut, the universal Trump tariffs will keep the United States in the enviable position of being able to say, “Not our problem,” and “mission accomplished.”

Steel output y/y    Feb.        Jan.       Dec.       Nov.       Oct.       Sept         Feb. 18

World                  +4.1%   +1.0%    +4.2%     +5.8%    +5.8%    +4.4%      +3.5%

China                  +9.2%    +4.3%    +8.2%    +10.8%   +9.1%    +7.5%     +5.9%

US                      +4.6%  +11.0%   +12.4%   +11.8%  +10.5%    +9.0%     +0.4%

Advertisements