Trade
Trump trade policy will turn the US into Brazil Shielding raw materials exporters while ignoring the decline of America’s high-tech capacity, defensive trade action stands no chance of rejuvenating the US industrial base David P. Goldman Mar. 2, 2018 Aerial view of steel mills in Indiana Harbor on Michigan lake near Gary, USA. Photo via AFP/Ricciarini The broad US stock market gave up an early rally and fell over 5% after President Trump’s announcement of punitive tariffs of 25% on steel and 10% on aluminum, the highest in US history. US Steel, the country’s largest producer of the metal, rose 6.4% on the news and aluminum producer Nucor gained 2.4%, while the S&P 500 average lost 1%. General Motors fell almost 4%, Ford fell 3%, United Technologies fell 2.8% and Boeing fell 3.4%. Raw materials prices have little to do with the erosion of America’s industrial base. Chronic underinvestment in capital-intensive manufacturing is the underlying problem, and American manufacturers avoid big capital commitments because they can’t compete with Asian subsidies for industrial plant and equipment. Asian economies view a $10 billion semiconductor fabrication plant the way Americans view a bridge, stadium or airport, as a public good that merits taxpayer support. China’s economy is so big that its subsidies distort capital investment around the world. By protecting raw materials exporters while ignoring the decline of American...
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