Consider Lourenco Goncalves, the Cleveland-Cliffs CEO who tried but failed to block Nippon Steel’s acquisition of U.S. Steel. Now he’s using tariffs to pitch his steel plants to foreign buyers.
Cleveland-Cliffs, one of the largest U.S. steelmakers, on Monday reported a $247 million loss in the second quarter. That’s nothing to celebrate. But the company’s stock price surged 12% because the company said U.S. tariffs have led to record shipments and buoyant prices, which cut the company’s first-quarter loss by half. Political intervention to limit competition tends to do that.
Mr. Trump in February eliminated steel tariff exemptions for trading partners like Canada. Last month he doubled the steel tariffs to 50% when he blessed the Nippon-U.S. Steel deal, ostensibly to please the United Steelworkers union. Cleveland-Cliffs is “uniquely positioned to benefit from this new reality,” Mr. Goncalves said.
He also said Mr. Trump’s 25% tariffs on autos and auto parts will help domestic car makers, which could boost demand for American-made steel—that is, unless higher car prices depress sales. Cleveland-Cliffs is the U.S. auto industry’s biggest steel supplier.
Tariffs could have another benefit for Cleveland-Cliffs: They will make its factories more attractive to foreign buyers. “Going forward, foreign competitors need to acquire steel capacity within the United States if they want to participate in this desirable market,” the CEO said.
The U.S. market for steel is especially desirable now because tariffs let domestic manufacturers pad their margins.
Dominic Pino reflects on Jeremey Horpedahl’s recent busting of some “China Shock” myths. A slice:
One narrative goes like this: China joined the WTO with U.S. support in 2001. This worked great for the U.S. economy as a whole and helped China get rich, but it hollowed out specific U.S. communities affected by trade, especially those with many manufacturing jobs, which have been turned into economic wastelands where no one can find work, and the jobs that do exist are poorly paid. This “China shock” is responsible for dissatisfaction with the U.S. economy and needs to be corrected through robust protectionism and manufacturing subsidies.
Jeremy Horpedahl tests this narrative against the facts from the ten metropolitan areas that “China shock” scholars said were most affected by trade with China. Most of them have more jobs today than they did in 2001, and all of them have higher real wages for workers at every income level.
Trump’s trade letters, posted on Truth Social and detailed by the White House are a clownish display of economic ignorance, fixating on bilateral trade deficits as evidence of America being “taken advantage of.” These letters reveal a shocking fundamental misunderstanding of trade and deficits, risking inflation, retaliation, and economic chaos.
The Editorial Board of the Washington Post hits the nail on the head: “In the long run, tariffs don’t hurt American consumers because they cause inflation or tank the stock market; they hurt because they make it harder for people to get the things they want.” [DBx: Let’s hope that the WaPo‘s Editorial Board continues to correctly understand tariffs when these punitive taxes on Americans are imposed, maintained, or raised by a future Democratic administration.]
Roger Ream talks with Daniel Hannan about the dangers of executive power.
The Congresswoman [Rep. Anna Paulina Luna, a Trump-aligned Republican from Florida] is trying to criminalize what at its core is an argument over monetary policy. Mr. Powell’s term as Chair ends next May and it’s certain he won’t be reappointed. Whatever Mr. Powell’s rhetorical inexactitude, it’s madness to create a new precedent for prosecuting officials for policy disagreements. Doing so is the road to the hyper-politicized monetary policy you’d expect in Argentina.
Jason Sorens makes a powerful case for allowing Americans to purchase automobiles on-line. A slice:
Before Amazon.com existed, you had to buy books — and any number of other things — at physical stores. If you wanted a new washer or refrigerator, you had to go to a Sears store.
Now imagine if, even worse, there were different stores for different manufacturers of refrigerators: one store for Whirlpool, another for LG, yet another for Bosch, and so on.
That’s just how most of us are forced to buy cars in the United States. Twenty-eight states, including Georgia, prohibit car manufacturers from selling directly to consumers with only narrow exceptions.
Who’d a-thunk it?: “Rent prices are falling fast in America’s most pro-housing cities.”
