Before we get all bent out of shape about tariffs on foreign steel and aluminum, let us note that imports of steel and aluminum amount to about 1/500th of the U.S. economy.
Yes, the tariffs are a bad idea; and yes, Trump is an economic nitwit living in a mercantilist mindset that was abandoned by everybody else over 200 years ago. And yes, we are not going to win any trade wars with anybody.
Still, everybody get a grip.
I recall in the early 1970s when I was first starting out to report on American business and reading the Wall Street Journal wall-to-wall, there was a plaintive advertisement that ran every day for months: a Pennsylvania foundry was soliciting to make gray iron castings at a capacity of 250,000 tons per year.
The reason that it didn’t have any work was China – still a pariah in international trade in those days – was dumping gray iron castings at ridiculously low prices and driving foundries around the world out of business. But it turned out the Chinese castings were worthless crap just like everything else China makes. The Chinese foundries didn’t even wash the greensand before reusing it. The forgings were pitted and full of voids and quickly rusted away.
China still dominates by tonnage in gray iron castings, but nobody who needs really high-quality ones goes there. Mexico also exports a lot of gray iron into the United States. But there are several foundries still operating here.
One of them, I noticed, in Alabama even announces on its Internet page that it was founded in 1970 – in the middle of the Chinese invasion — with the intention of proudly serving American companies with good old-fashioned American cast iron.
So China is left with the international market for things like cast iron park benches, but when it counts it counts, companies that need high-quality forgings take their trade elsewhere. A quick search found a 2010 survey which commented that Chinese quality control was “weak but improving.” That’s very slow progress.
China at that time held 36% of the world market (for iron forgings generally, not just gray iron) and workers in Chinese foundries were making 50 cents to a dollar an hour.
American, Japanese and European founders primarily serving the automotive industry pay more, and get more.
Trump’s ridiculous policy will not save any American jobs, net, but his