(What’s Left of) Our Economy: It’s “Big Week” on Trade

Tags

100-day China plan, Canada, China, environmental standards, G20, Gary Cohn, H.R. McMaster, James Mathis, labor standards, Mar-a-Lago summit, Mexico, NAFTA, North American Free Trade Agreement, North Korea, Robert Lighthizer, rules of origin, steel, Steve Mnuchin, tairffs, Trade, Trump, Wilbur Ross, Xi JInPing, {What's Left of) Our Economy

During World War II, the United States and the United Kingdom launched a massive multi-day strategic bombing campaign against Nazi Germany called “Big Week.” The stakes are considerably less apocalyptic, but yesterday began a period for U.S. trade policy that qualifies as a big week, too. Here’s why, and what to look for.

First, yesterday marked the deadline for the 100-day plan announced at the summit between President Trump and his Chinese counterpart Xi Jinping to start bringing down America’s immense trade deficit with the People’s Republic. Some near-term deals were announced in May, and the Chinese seem to be playing along, to at least some extent. But even the American offshoring lobby, which has greatly soured on China since its full-court-press lobbying campaign convinced Washington to expand U.S.-China trade exponentially, has been complaining that agreements of this scope are way too small to solve their own problems with Beijing in the Chinese market. These deals have even less potential to stop most of the damage still being inflicted on the American domestic economy from wide-ranging predatory Chinese economic practices.

The results are due to be announced this week – and may be delayed to take into account whatever can be accomplished by a new high-level economics dialogue that will hold its first session in Washington this week. Will they produce some big wins for the administration and the domestic economy? As I see it, reasons for pessimism outweigh reasons for optimism.

The former include the president’s continuing statements about the threat posed by China’s imports (in this case, of steel), and the awareness demonstrated by his campaign of how varied and unconventional (meaning they went far beyond tariffs and quotas) China’s trade and trade-related transgressions have been. Among the reasons for pessimism, though, are intra-administration divisions that entail both economic issues (with the administration’s economic populists arrayed against what’s been called the pro-free trade “Goldman Sachs” gang comprised of top economic adviser Gary Cohn and Treasury Secretary Steven Mnuchin) and security issues (pitting the populists against traditional foreign policy thinkers like national security adviser H.R. McMaster and Defense Secretary James Mattis, who would sympathize with notions like the claim that China should be courted to enlist its help in sitting on North Korea). In addition, the kinds of staffing woes still dogging the administration typically make sharp departures from a policy status quo difficult to engineer.

In fairness, Commerce Secretary Wilbur Ross, who has forthrightly described the China economic challenge, acknowledged when announcing the 100-day trade plan’s first results that three months worth of talks couldn’t possibly be a game-changer precisely because China’s mercantilism was so pervasive. But in so doing, he unintentionally made the argument – which I support for U.S. trade policy generally – for dispensing with talks altogether and capitalizing on China’s urgent need to export to the United States by addressing this issue unilaterally.

Certainly, this kind of course change would be much more consistent with the president’s numerous campaign statements emphasizing the destructive effect of Chinese predation on America’s economy and working class. It’s also the kind of strategy you’d expect from a chief executive whose non-trade agenda is almost completely stalled in Congress, who’s under intense political pressure, and who could badly use a big economic win in order to prevent major Congressional losses in the next off-year elections – whose campaign cycle will be here before he knows it.

Another big (self-imposed) administration deadline falls today. It marks the date by which the White House said it would submit its detailed plan to renegotiate NAFTA – the North American Free Trade Agreement. In May, U.S. Trade Representative Robert Lighthizer sent Congressional leaders a brief letter alluding generally to some objectives, but by tomorrow he needs to fill in critical details. Many might have been contained in a draft letter released March 30, and that plan looked pretty impressive. The big question of course is which ones will wind up surviving – and whether the administration is open to other ideas.

As I’ve written, the most important issue concerns the treatment of “rules of origin” – the provisions of NAFTA aimed at ensuring that any goods sold in the three signatory countries (the United States, Canada, and Mexico) are overwhelmingly made in some combination of those countries. The deal that’s currently in place specifies North American content levels that need to be met to qualify for duty-free treatment inside the free trade zone. But the tariff penalties for goods not meeting these standards aren’t nearly high enough to achieve the goal of increasing the entire region’s competitiveness.

The March 30 letter suggested that the administration would seek origin rules that promote U.S. production and jobs more effectively, but it didn’t say how. If much higher external tariffs aren’t proposed in the plan due today, it’s doubtful that any reforms will result in non-NAFTA countries to make more of their products in any of the countries inside the NAFTA zone. Moreover, it’s of course going to be easier for Washington to persuade Canada and Mexico to go along if it re-emphasizes what President Trump has been saying since his meeting last summer, before the election, with his Mexican counterpart: NAFTA should aim to boost the competitiveness of all three countries.

The brief May 18 Lighthizer letter also suggested obliquely the need to change NAFTA’s dispute-resolution procedures, and the March 30 draft discussed the issue at greater length. But even its recommendations to strengthen America’s authority both to respond to import surges from its NAFTA partners (called “safeguards”) and to apply its own Buy American government procurement rules to intra-NAFTA trade may not go far enough.

As I’ve explained, the fundamental problem is that the current dispute-resolution process treats the three NAFTA countries as legal equals, even though the U.S. market is nearly 90 percent of the total NAFTA market, and clearly remains the most valuable prize for all three signatories. Without closing or somehow changing acceptably, the yawning gap between the NAFTA legal regime and the economic facts on the ground, it’s hard to imagine the system serving U.S. interest on net.

At this point, you might be wondering why I haven’t mentioned NAFTA’s labor and environmental provisions. The reason? Although they’ve been major objectives of Democratic party and other left-of-center NAFTA and broader trade policy critics, as with their counterparts in the Trans-Pacific Partnership (TPP) deal, they’re largely unenforceable. As I’ve asked before, how many American bureaucrats will be needed to run around how many factories in a signatory country (in this case, Mexico) to ensure that companies aren’t abusing workers or dumping sewage into nearby streams? With more effective rules of origin, however, producers in Mexico will feel less pressure to remain competitive versus rivals in China and elsewhere in Asia by offering the worst possible working conditions and ignoring environmental considerations completely.

Finally, there’s the steel tariff issue. The administration has delayed announcing its decision to impose national security-related tariffs on U.S. steel imports, but is expected to reveal its intentions this week. For what it’s worth, the president sounds determined to approve some levies on some countries’ steel. The main question is who the main targets will be. It will also be crucial to see whether and how prominently the announcement emphasizes the need to deal decisively with the underlying problem – the ocean of subsidized steel from China that has flooded and distorted world markets in recent years.

At the same time, there’s a reason for Mr. Trump to punt – or to punt for the most part: At their summit earlier this month in Hamburg, Germany, the leaders of the world’s twenty largest economies (the “G20”) agreed to require an international commission on the subject to deliver a report by November containing “concrete policy solutions that reduce excess steel capacity.” Postponing unilateral action until this mandate is fulfilled could prove a tempting option for a president who doesn’t exactly need to come under fire from new fronts.

Moreover, if the commission’s ideas don’t pass U.S. muster, Mr. Trump would be in a much stronger position to slap the tariffs on everyone, and vow to maintain or even increase them until meaningful, concrete agreements are reached.

President Trump has been sending surprisingly (at least to me) mixed signals on trade since his Inauguration Day two-step – killing the TPP but refraining from labeling China a currency manipulator. Big Week in trade isn’t likely to clarify the picture fully, but we’re bound to know more at its end than we do here at the beginning.

(What’s Left of) Our Economy: New Fed Figures Support Case for U.S. Steel and Aluminum Tariffs

Tags

aluminum, capacity utilization, Federal Reserve, Great Recession, imports, industrial production, inflation-adjusted output, iron and steel products, manufacturing, primary aluminum products, recovery, steel, subsidies, tariffs, Trade, {What's Left of) Our Economy

Today’s Federal Reserve industrial production figures contain data supporting claims that the American domestic steel and aluminum industries face heavy global competitive pressures rooted in predatory trade practices that require vigorous responses.

According to the new data, which update the U.S. manufacturing picture through June on a preliminary basis, inflation-adjusted output for all American factories rose by 0.19 percent month-to-month, and by 1.36 percent year-on-year.

Real production of iron and steel products fell by 0.51 percent sequentially in June, and are up by just 0.47 percent on year. For primary aluminum products, the figures are better: monthly after-inflation output improved by 0.26 percent, and it advanced by 1.79 percent over the June, 2016 levels.

Longer term, though, the trends in these two sectors, and in U.S. domestic industry as a whole, have diverged sharply. Since the Great Recession officially broke out, the Federal Reserve data show that American manufacturing’s constant dollar output still hasn’t fully recovered. Indeed, it’s still down by 4.03 percent.

But real iron and steel products production is still 18.55 percent lower than at the recession’s onset – more than nine years ago. Inflation-adjusted primary aluminum production stands at less than half its December, 2007 levels, having plummeted by 53.01 percent.

The plight of steel and aluminum is also apparent from the capacity utilization figures. For all of domestic American manufacturing, utilization rates were 75.88 percent. That’s 3.72 percent below the last pre-recession level of 78.81 percent.

For iron and steel products, the drop has been much steeper – capacity utilization is down 21.47 percent from its December, 2007 level of 92.11 percent. And although the latter level looks unusually high, it had been achieved regularly by these producers during previous decades.

The Fed doesn’t keep capacity utilization figures for aluminum. But statistics for the broader primary metals sector indicate that its fate has been nearly as bad. Capacity utilization since the end of 2007 has sunk from 83.52 percent to 68.24 percent – an 18.30 percent plunge.

As widely reported, this deterioration has coincided – at the very least – with an explosion in the production and export of subsidized steel and aluminum from China. As has been much less widely reported, U.S.-based producers have borne the brunt of the costs. Although comparable numbers are not available for aluminum, the American share of the global steel market has fallen by considerably more during the current economic recovery than the shares of other steel-production countries and regions. In addition, the United State runs by far the world’s biggest steel trade deficit.

It’s still unclear whether or not President Trump will decide to impose any national security-related tariffs on steel imports, which countries’ shipments will or won’t be hit, or what other measures he might approve if the tariff route is rejected. But it’s all too clear that without significant action from Washington, two more important American manufacturing sectors could needlessly fall victim to foreign trade and broader economic policies having nothing to do with either free trade or free markets.

Making News: John Batchelor Podcast On-Line – & More!

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Americatrendspodcast.com, Gordon Chang, John Batchelor, Larry Rifkin, Making News, steel, tariffs, The John Batchelor Show, Trade, Trump

I’m pleased to announce that the podcast is now on-line of my appearance last night on John Batchelor’s nationally syndicated radio show.  Click here for a great discussion among John, co-host Gordon Chang, and me, of President Trump’s upcoming decision on curbing U.S. imports of steel, and how it may affect the entire global economy – including (what’s left of) America’s.

Moreover, I just finished recording an interview on similar subjects with Larry Rifkin at Americatrendspodcast.com.  Like John and Gordon, Larry is a terrific broadcast journalist and I hope his new venture wins a wide audience.  I’ll keep you posted regarding plans to post our wide-ranging conversation.

And keep checking in with RealityChek for news of upcoming media appearances and other developments.

 

(What’s Left of) Our Economy: Former White House Economists Serve Up Steel Trade Fakeonomics

Tags

competitiveness, durable goods manufacturing, imports, manufacturing, multi-factor productivity, national security, productivity, steel, steel-using industries, subsidies, tariffs, Trade, Trump, White House Council of Economic Advisers, {What's Left of) Our Economy

Just because none of the signers displayed the slightest ability to foresee the approach of an horrific national and global economic crisis is no reason to laugh off the letter released by former White House economists warning President Trump not to impose national security-related tariffs on steel imports. Instead, the letter should be laughed off because none of the signers appears to know anything about manufacturing competitiveness.

According to the letter, endorsed by fifteen former Chairs of the White House Council of Economic Advisers, steel tariffs of any kind “actually damage the U.S. economy” partly because they “would raise costs for manufacturers, reduce employment in manufacturing….”

If you think about it for just a minute, what these economists are really arguing is that American steel-using industries can’t possibly achieve reasonable levels of competitiveness without continuing supplies of a key input that are kept artificially cheap by massive subsidies from governments in China and elsewhere. That’s some recipe for preserving and extending free market and free trade practices around the world.

Even worse, however, is that even this dubious claim is directly contradicted by the best data available – including the newest multi-factor productivity statistics released by the Labor Department yesterday.

These data in particular strongly reinforce worries not only that American manufacturing is suffering major productivity problems, but that these problems have been worsening for many years. And just as important, they show that the steel users in particular have suffered from absolutely no shortage of artificially cheap steel.

For example, from 2009 (when the current economic recovery began) through 2015 (the latest data, multi-factor productivity in these industries (which measures the output resulting from a wide range of inputs, including materials like steel) has fallen by 2.17 percent. In durable goods industries as a whole (a super-sector that uses a lot of steel), it rose by 3.92 percent, which sounds OK. But it’s much weaker multi-factor productivity growth than these sectors achieved during the last recovery (which was considerably shorter): 22.27 percent.

What happened to steel imports from 2009 through 2015, measured by value? They surged by 71.87 percent. And these purchases were kept at that level mainly because during the last year of that stretch, steel imports sank by 20.91 percent. In other words, between 2009 and 2014, steel imports jumped by 117 percent – and presumably left over lots of steel for use by durable goods manufacturers the following year.

Steel imports soared during the previous, 2001-2007 recovery as well (by 156 percent). But whereas they increased at roughly double the rate during the first six years of the current recovery, steel users recorded multi-factor productivity gains that were 5.7 times greater.

During the long 1990s expansion (which technically lasted from 1991 to 2001), steel imports increased by only 28.67 percent. And even so, durable goods manufacturers managed a total productivity gain of 22.72 percent – just about the same improvement as during the import-happy early 2000s, even though import growth was only a seventh as great. And this productivity advance was orders of magnitude better than that of the current recovery, even though import growth has been less than a third as strong.

Now it’s true that durable goods productivity numbers have been boosted significantly by the spectacular performance of the information technology hardware sector (whose use of steel is relatively modest). But examining multi-factor productivity trends for much bigger steel users also yields head-scratching results if you take the former White House economists as gospel.

For example, during the first six years of the current recovery, when steel imports rose by nearly 72 percent, multi-factor productivity for fabricated metal makers actually sank by 4.02 percent. In machinery, it was down 0.93 percent. In electrical equipment, appliances, and components, multi-factor productivity dipped fractionally.

Transportation equipment is the only big steel-using sector where multi-factor productivity grew impressively during this period – by a total of 11.09 percent. But during the final year – 2014-15 – it dropped by 4.39 percent. And again, these companies were benefiting from plenty of artificially cheap steel.

So it’s clear that the former White House advisers’ steel trade analysis is anything but data-dependent. That leaves as their only anti-tariff argument their fears about setbacks in American diplomacy – where they possess no special expertise or even knowledge. Far better for these macro-economists to stick to macro-economics – though again, the overall U.S. performance here should inspire no confidence in their judgment, either.

(What’s Left of) Our Economy: Trump Steel Trade Critics Offer Recipes for (Continued) Failure

Tags

Barack Obama, China, European Union, globalization, Japan, national security, Russia, steel, tariffs, The Washington Post, Trade, trade law, Trump, World Steel Organization, World Trade Organization, {What's Left of) Our Economy

The case for bold new Trump administration steps to ensure the U.S. steel industry’s continued viability is so clear that even opponents can’t help but (unwittingly) make it.

Thus this morning, The Washington Post editorial board praised – or at least seems to have praised – the Obama administration’s imposition of the tariffs on imports of Chinese steel because the world’s overwhelming source of overcapacity is China. The Post also urged the White House to remember that in order to avoid “international destabilization,” it’s critical to keep relying on “global institutions such as the World Trade Organization.”

Yet as the paper implicitly recognizes, none of these approaches has succeeded. What else can reasonably be concluded from its acknowledgment that the although the world’s “major governments, including President Barack Obama’s administration, have long recognized” the problem of Chinese fueled steel overcapacity,” the glut continues to create “unsustainable downward pressure on producers’ prices….” That’s “unsustainable” as in “can’t be sustained.” As in “if the downward pressure isn’t stopped, steel producers will start going under.”

The Post, however, has left out some crucial information. Specifically, the pressure on global steel producers has been far from uniformly felt. According to the latest (2015) figures from the World Steel Organization, which represents most of the global industry, the United States runs the world’s largest steel trade deficit by far measured in volume (which leaves out the distortions created by falling prices). At 26.5 million tons, it was nearly 80 percent greater than that of the world’s next biggest net steel importer (Vietnam, at 14.9 million tons), and nearly seven times greater than that of the European Union (3.9 million tons).

China, Japan, Russia, South Korea, and others are running surpluses, with China lapping the pack at 98.4 million tons and Japan, universally described as a staunch U.S. ally, coming in second at still-impressive 34.9 million tons.

These skewed trade patterns, moreover, are unmistakably affecting national steel output. For example, according to the World Steel Organization, in 2010, as the world’s recovery from the Great Recession was becoming established, the United States accounted for 7.46 percent of global steel output by volume. In 2016, its share had shrunk to 4.95 percent.

China clearly has been the big winner, with its share of world steel production rising from 42.62 percent to 50.16 percent during this period. Japan has boosted market share as well – albeit only from 6.49 percent to 6.60 percent. The European Union and Russia have lost ground – but the losses have been minimal. The former’s global market share has dipped from 11.54 percent to 10.43 percent. The latter’s is down from 4.48 percent to 4.45 percent.

Even weirder: America’s economic growth during this period has outstripped the recoveries of all these countries except China, and its manufacturing sector has recovered (though not completely) thanks largely to a rebound in the steel-intensive automotive industry.

In other words, according to the Post editorial board, due to global overcapacity, the U.S. steel industry is facing unsustainable (and largely artificial) pricing pressure, the worldwide statistics make clear that this pressure is in a class by itself…and the Trump administration is being advised to stick with responses that have been manifestly incapable of preventing this dangerous situation.

It’s perfectly respectable to oppose as a solution the kind of national security-focused tariffs that the Trump administration is considering – even though the advantages they offer (they need no Congressional approval and they can be implemented relatively quickly as well as flexibly) are substantial. But if critics – domestic and foreign – are genuinely interested in solving the longstanding world steel problem in a timely manner, they’ll start proposing alternatives that haven’t already failed.

Making News: Podcast of Latest National Radio Appearance – & More!

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", America First, China, Europe, Lifezette.com, Making News, Republicans, steel, The John Batchelor Show, Trade, World Trade Organization

I’m pleased to announce that the podcast has finally been posted of my appearance last Wednesday on John Batchelor’s nationally syndicated radio show.  Click here for the link to a great discussion of Donald Trump’s quasi-threat to pull the United States out of the World Trade Organization.  My segment starts at the halfway mark.

Also, it’s been great to be quoted in two July 21 Lifezette.com posts on the politics of this election year (or is it the economics of this political year?):

>this post on how Europe is handling (or mishandling) China’s assault on its steel industry (a threat America faces, too); and

>this article on the inroads being made in Republican ranks by Trump’s “America First” trade and foreign policies.

Keep checking back on at RealityChek for more news of recent and upcoming media appearances and other special events!

Following Up: Where Trump on Trade Falls Short

Tags

2016 election, advanced manufacturing, apparel, Donald Trump, Follwing Up, Hillary Clinton, inflation-adjusted growth, Made in Washington trade deficit, multinational corporations, NAFTA, North American Free Trade Agreement, offshoring, offshoring lobby, recovery, regulation, Rust Belt, steel, subsidies, taxes, The Race to the Bottom, Trade, Trade Deficits, trade law, World Trade Organization, WTO

Donald Trump has just given a deadly serious, detailed, and common-sensical speech about the need for overhauling American trade policy, and the establishment media has decided to respond largely by dredging up the fatuous observation that the presumptive Republican presidential nominee himself produces his name-brand apparel overseas.

Before dealing with some of the genuine – though anything but fatal – shortcomings of Trump’s trade speech, let me (again) dispose of this ignorance-based cheap shot: The very trade policies that Trump has been attacking have practically destroyed the domestic U.S. apparel industry. When Trump claims that it’s nearly impossible to make garments in this country profitably anymore, he’s absolutely right. Indeed, the Federal Reserve’s industrial production data show that, since the North American Free Trade Agreement went into effect in January, 1994, and launched the current, offshoring-focused stage of U.S. trade policy, domestic garment output is down nearly 83 percent in real terms. That’s a bloodbath.

Yes, that means that some companies still produce clothing in the United States. But it also means that the biggest money in the industry has taken the hint that opening the American market to competition from penny-wage developing countries with no meaningful environmental or worker safety regulation has been an invitation to shut down or join the party and offshore. Any journalist who fails to mention these facts is either clueless or trying to sell you a bill of goods.

At the same time, since most of the public isn’t well informed about trade and manufacturing specifics, either. And since a torrent of such slanted coverage – which has been echoed by Trump’s presumptive November rival, Hillary Clinton – can definitely affect voter judgment, Trump needs to make it as difficult as possible for opponents to portray him as a know-nothing or a hypocrite on what he clearly sees as a core issue. This is where his Tuesday speech – which overall, I liked – fell somewhat short. Here are some important examples:

>Trump deserves a lot of credit for pointing out that misguided policies have killed not only employment – especially in trade-sensitive manufacturing – but growth throughout the economy. But he left off the table eye-opening figures on just how great the trade toll has been. As I’ve documented, during this feeble economic recovery alone, the growth of that portion of the trade deficit directly influenced by trade policy (what I call the Made in Washington trade deficit) has so far slowed this already feeble expansion by some 20 percent. That’s more than $400 billion after inflation, and he should have defied anyone to insist that huge numbers of jobs haven’t been destroyed as a result.

>The likely GOP standard bearer also rightly blasted American political and business elites for pushing these damaging policies. But explaining exactly why will not only educate the public – it will further infuriate voters. As I’ve written repeatedly, and most comprehensively in my book, The Race to the Bottom, the offshoring focus that has dominated U.S. trade policy since the early 1990s resulted from American multinational corporations realizing that expanding commerce with low-income countries would enable them to improve their own (though not the nation’s) competitiveness and boost profits by supplying the high-price American economy from super-low cost and largely unregulated production sites.

In other words, for all the talk about gigantic, rapidly growing third world markets, post-NAFTA trade deals weren’t mainly about expanding American exports – and therefore growth, employment, and wages. They were mainly about expanding U.S. imports from the multinationals’ new foreign production sites. That is, big American business wanted Americans to keep playing their roles as consumers of the products they made. They just didn’t want them to keep playing their roles as producers of these products. You don’t think a critical mass of voters would be outraged to hear this?

>Trump’s vow to file suits in the World Trade Organization to open foreign markets to U.S.-origin goods and services and halt predatory foreign trade practices is completely inadequate. As I’ve also written, the WTO is far from a U.S.-like trade court where objective magistrates render impartial justice. It’s an anti-American kangaroo court numerically dominated by foreign trade powers whose overwhelming interest lies in keeping the U.S. market much more open to their goods and services than their markets are to U.S. exports. That’s largely why even when the United States does win WTO cases, the process takes so long that American interests have been dealt decisive setbacks.

In fact, that’s also why the Offshoring Lobby pushed so hard back in the 1990s for U.S. Entry into the WTO. They knew that it would give predatory foreign trade powers substantial legal immunity from American efforts to deal with illegal subsidization, dumping, currency manipulation, and the like – and that the factories they moved and built abroad would benefit from these market-distorting practices at the expense of domestic American producers and their workers.

In other words, Trump shouldn’t be arguing for working through the WTO. He should be promising to seek an American withdrawal.

>Trump’s related promise to file more suits against predatory foreign traders in the U.S. trade law system is sorely inadequate for three main reasons. First, as suggested above, the WTO nullifies most of America’s legal authority to use such unilateral mechanisms. Second, the domestic trade law system is almost as slow-moving as the WTO. And third, this legalistic set of procedures is by definition piecemeal and reactive. If Trump thinks that American trade law can help make the U.S. economy great again in his lifetime, he’s dreaming.

>I recognize that the steel industry has acquired iconic status in American culture and politics. It also remains incredibly important economically. But Trump’s exclusive reliance on steel’s recent woes to illustrate what’s wrong with American trade policy unfortunately reinforces the wrongheaded conventional wisdom that trade policy critics are naively obsessed with reviving so-called Rust Belt industries.

What Trump should have added is that manufacturing sectors running sizable trade deficits also include semiconductors, electro-medical devices, all categories of machine tools, farm machinery, construction equipment, ball bearings, telecommunications equipment (not including smartphones), and pharmaceuticals. Believe me, I could go on. And that’s not your classic Rust Belt stuff. Are all these domestic producers hopelessly uncompetitive, Trump should ask? Or are global trade markets unmistakably rigged even against American-made products falling into any knowledgeable definition of advanced manufacturing?

>Trump clearly felt the need to throw some red meat to traditional Republicans and conservatives by also promising to boost the productive sectors of the American economy by getting rid of “wasteful rules and regulations” and cutting taxes in order to “make America the best place in the world to start a business, hire workers, and open a factory.”

Of course, there’s an important, legitimate debate about the proper scope of regulations and the proper level of taxation for both corporations and individuals. Think though, of the outreach potential to independent and even many Democratic voters had Trump added something along these lines:

“But we also have to remember that many of our regulations also serve the vital purpose of protecting us from dangers like polluted air, water, and land; and unsafe food and workplaces. By freeing America’s domestic companies of the need to compete against rivals free to ignore these goals, we preserve regulations reflecting values we should be proud of, and ensure that we remain a genuine first world country.”

And let’s not forget arguments made in Trump’s tax plan (though in a form that’s surely vastly overstated) but neglected in this speech: All else equal, the faster the economy’s real (as opposed to bubble-ized) growth, the stronger its ability to generate the tax revenues that are both politically acceptable and needed to finance true national needs and popular national desires in a responsible way.

Again, I really do believe that this Trump speech was the best Americans have heard on trade in decades. But that bar has been abysmally low. If Trump wants to make America “Greater Than Ever Before” ensuring that his trade positions fit this description will help a lot.

Making News: On Laura Ingraham’s Nationally Syndicated Radio Show this AM

Tags

2016 election, China. trade, Laura Ingraham, Making News, steel

I’m pleased to announce that I’m scheduled to appear this morning on the nationally syndicated Laura Ingraham Show to talk about U.S.-China trade relations and the presidential campaign.  The segment is set to air at 10:30 AM EST.  Sorry for the short notice!  You can listen live at http://www.lauraingraham.com.

And as usual, I’ll post the podcast as soon as it’s available.

 

Those Stubborn Facts: Cheaters Prosper in World Steel Trade

Tags

China, dumping, overcapacity, steel, subsidies, Those Stubborn Facts, Trade, United States

Global steel production* ytd 2014-15 (November) -10.64%

China: -10.25%

United States: -17.05%

*in volume

(Source: Calculated from “Monthly Crude Steel Production, thousand tonnes,” World Steel Association, https://www.worldsteel.org/dms/internetDocumentList/steel-stats/2015/Crude-steel-production-Jan-Nov-2015-vs-2014_/document/Crude%20steel%20production%20Jan-Nov%202015%20vs%202014.pdf)

(What’s Left of) Our Economy: New Fed Figures Show Manufacturing Doldrums Continue

Tags

automotive, dumping, durable goods, Federal Reserve, industrial production, manufacturing, nondurable goods, recession, recovery, steel, {What's Left of) Our Economy

The latest Federal Reserve industrial production report showed that, after inflation, U.S. manufacturing output inched back up in March, but revisions for February and January kept its levels down below November’s figures. Although the automotive sector – a manufacturing leader for most of the current recovery – saw real production rise for the first time in four months, the sector remained in a technical recession, along with durable goods industries overall. Steel has emerged as another worry, with foreign dumping crippling its output, and overall, the manufacturing sector has grown by only 2.15 percent in inflation-adjusted terms since the last recession began.

Here are the manufacturing highlights of the Federal Reserve’s new release on March industrial production:

>This morning, the Federal Reserve reported that inflation-adjusted American manufacturing production in March posted its first monthly increase since December, but feeble growth and downward revisions left its output levels down on net since November (by 0.68 percent).

>Real manufacturing output advanced by 0.13 percent on month in March, and February’s 0.24 percent sequential drop was revised up to a 0.22 percent decrease. Yet January’s 0.27 percent decline was revised down to 0.59 percent.

>March’s small manufacturing rebound was led by the automotive sector, whose real production rose by 3.22 percent on a monthly basis – its first improvement since November. But February’s fall-off was revised down from three percent to 3.55 percent, and January’s decline was revised down for the second straight time, from 0.61 percent to 0.71 percent..

>Largely because of these figures, both the automotive industry and the durable goods sector saw their technical recessions continue. Inflation-adjusted production for both is now down on net since July.

>Overall manufacturing and durable goods output was also undermined the steel sector, which has recently been targeted by a massive foreign dumping campaign. Inflation-adjusted iron and steel output plunged 5.23 percent in March on a monthly basis, and is now down 12.36 percent year on year. In fact, real production in the sector is now down on net for more than five years – since February, 2010.

>The new March figures mean that inflation-adjusted overall U.S. manufacturing output is only 2.15 percent higher than it was when the Great Recession in December, 2007 – more than seven years ago.

>Non-durable goods production, long a manufacturing laggard, rose for the fifth straight month in March, though the increase (0.07 percent) trailed that for durable goods (0.17 percent).

>Sluggish March growth depressed manufacturing’s year-on-year gains from a downwardly revised 5.10 percent in January to 2.70 percent. Between March, 2013 and March, 2014, inflation-adjusted manufacturing output increased by 3.13 percent.

>Including the February data, durable goods output is now 8.92 percent greater in inflation-adjusted terms than at the December, 2007 start of the last recession.

>Real non-durable goods production is now 5.74 percent less after inflation than at its pre-recession peak, which was hit in July, 2007.