It only affected US manufacturers and left chinese finished good imports unaffected

QUESTION: What is your justification for the cost increase?

With the pending implementation of the steel tariff under section 232, we have been negatively impacted due to price changes from mills. Mills are primarily focusing in on high profit type grades of material such as 304.

QUESTION: Why are the mills' pricing increasing?

First, the 25% tariff is to be applied to certain foreign material. Consequently, this has provided an avenue for North American mills to raise pricing. Next, the restriction of material from foreign countries has created a shortage of material. The announcement of Section 232 has stopped/slowed the flow of foreign steel, causing the shortage.

QUESTION: Are some countries exempt from the steel tariffs?

Yes, however, not completely. For example, Korea has been restricted to 70% of shipments since 2015. Brazil's exemption has not been finalized. The same is true for other countries. Each country needs to negotiate directly with President Trump for all appeals. NAFTA countries (Mexico and Canada) are currently exempt, but will be subject to the new NAFTA rules, currently in negotiations.

QUESTION : What other variables are impacting pricing?

Nickel has adjusted from the $10K range to the $13K range over the last 4 months. Chrome has adjusted from $1.10 to $1.40 during this same period. Scrap/Iron, which makes up 80% of stainless steel, has adjusted from $325/ ton to $385/ton. Other alloys have had significant adjustments as well. For example, hot rolled steel has adjusted $610/ton in November and $856/ton in March.

QUESTION: Are there other material options?

With the reduction of imports, U.S. mills are focused on the highest revenue products. This includes primarily heavy gauge (thicker) 304. Material grade 201 and 430 are more difficult to produce and/or have higher production costs, along with supply shortage. This results in the mills focusing on higher prof it material. We anticipate further price pressure on certa in grades of materials.

QUESTION: Where does [our vendors company] steel come from?

Our steel comes primarily from U.S. and Mexico; however, we do get some steel through other processors who purchase mat erial from targeted countries. We are also impacted by U.S. mills' price increase/surcharges in response to the Section 232. Many mills have already announced double digit price increases within days of the president ial announcement. In addition, various surcharges will be effective in 02.

QUESTION: Can you purchase your steel from less impacted nations (i.e., European countries)?

There are several variables that limit this opportunity. Product mix makes the change more difficult and time consuming. Due to increased demand, lead time has substantially increased, which result in further price increases in less impacted countries. The cost to produce steel is relatively the same. Labor in Europe mirrors costs in the U.S. Add itionally, currency rates adjust constantly, and the U.S. dollar is currently weaker than the Euro. Shipping costs, lead time and availability also play into consideration.

QUESTION: What is the impact of steel as a percentage of product?

Steel and aluminum amount to a significant% of most of our products. However, we are only passing partial impact to our customer base.

QUESTION: What are [insert vendors name] projections regarding costs as we move into next year?

Tariffs create uncertainty. It is difficu lt to say what changes domestic mills will implement to add capacity. With the current situation, the U.S. Steel Market will maintain a gap in supply and demand. Additional concerns include how fore ign countries will respond to these tariffs; so, the situation could get worse before it gets better.

With all that said, we are doing our best NOT to pass all the cost increases to our customers. Based on current and future projections, we are only passing partial impact to our customers, while working diligently to reduce costs and mitigate supply and lead times thought other means. But, due to the large steel/aluminum content in our products and unprecedented impact and uncertainty in the global supply markets, we are forced to take this measure.

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IN SHORT, even though they might not buy the steel / tariff from China, prices went up globally across the board. Normally vendors raise 3 to 5% annually due to inflation, but because of trumps tariff they were forced to raise it 3 to 5% TWICE within a year. Note some of these pieces of equipment range from 5k to 100k in cost, so 3 to 5% is a huge amount.

More generally, as I understand it, the reason economic orthodoxy is against tariffs is because of "comparative advantage", and the idea that different countries could produce different goods or services more efficiently than others, not just more cheaply, due to subsidization or other distortionary interventions like that.

You could make an argument along those lines here, and that would be valid, but the superficial observation that your prices went up isn't really enough to say either way.

Tariffs might help a very few people, those working in a factory that makes these 'higher human overhead' objects. But everyone else will (1) first pay more for the object that's probably still not made in the us but not imported at higher cost. Things built by using that now higher priced widget will cost 25% more because of the tariff. so they have to lose most/all profit and/or increase their price, kicking it up the food chain.

So it's a net negative to have tariffs on things that can be made by basic hourly workers. There must be some people helped, like say a steel producer who makes things that was competing with China. But like coal workers, there aren't that many. Remember there are more Arby's workers than coal miners.

Why is paying higher wages while keeping the money in the community/country a "disadvantage" exactly? Aren't you looking only at consumption without considering production?

Honestly, this sounds like parroted ten year old globalist propaganda. Craft beer has already shot this entire line of argument down, and other industries show signs of beginning to follow that model.

And the sharply increasing cost of long haul as manual truckers exit the industry is hastening the trend in 2018. Historically transportation costs exceeded any efficiency of "comparative advantages".

If I was a worker in a factory making things with physical labor, and I have a typical us standard of living, how can I do that more efficiently than someone in china, who gets paid less? I love craft beer, but it's a combination artistic and luxury product. It's not like making ball bearings. It has an aspect of knowing what the micro local market wants. It has a marketing and uniqueness possibly. On the other hand, no one is I know is making craftsman lumber to make houses out of (but they could I guess).

It's not the workers who have to do something extra to justify what they're making.

[1] https://www.epi.org/productivity-pay-gap/

I think the right way is sealing tax system to efficiently gather tax from businesses so that productivity gains can properly benefit everybody and just tax employees less if you want that gains to improve employees wellbeing. Or even subsidise poor people through income tax credit or basic income.

Well, the theory was that if his workers could buy his cars he'd make more money.

But that is the same type of logic as selling items at marginal loss and trying to make a profit by moving huge volumes. The fact that it worked so well suggests there was something else going on that I don't know about.

> Why is paying higher wages while keeping the money in the community/country a "disadvantage" exactly? Aren't you looking only at consumption without considering production?

So obviously the absolute number doesn't matter - otherwise we could multiply all dollar figures by 10 at the end of each year and call ourselves wealthy! :D

The relative distribution is everything. The game is to split people up into the nearly-everyone camp who take resources and consume them, and the rare talent camp that can turn resources into more resources. I'll call our rare and talented individuals group 2.

Take a silly example, wood. Give most people wood, and most people can burn it for heat. The more productive individuals can build something out of it, like a house (which is a better long-term investment in terms of conserving heat). Maybe the most productive would turn it into an axe shaft and cut down a few trees, liberating more wood.

The aim of the game is to move as much of societies resources to group 2 as we can reasonably manage, because then we will have massive resource surpluses that we can all enjoy.

"Keeping [resources] in a community" is a fine if your community has a couple of people in group 2 that you can divert them to. Otherwise, you'll find that all your resources get consumed and mysteriously there is no surplus any more. If you give all your resources to productive foreigners, they can give you back the same amount, plus a little extra, and themselves be wealthy. Discovering this little dynamic is the heart of economics.

The downside is that true group 2-ers are rare, and usually busy enough that they aren't very visible. People forget about them and try to divert resources to the deserving but chronically unproductive instead. If it gets extreme, communism happens and everyone starves.

Nonetheless it’s still illustrative of, as you call it, economic orthodoxy. Put more plainly, most economist say this shits no good. It can be very counterproductive, dangerous even.

Yes, we'll suffer for 50 years, BUT in that time the supply chain will be created in the U.S. and our grandkids and their children will be able to benefit from having all that industry in the U.S. instead of China.

And if I'm wrong, I won't be alive to be able to say I'm sorry to my grandkids who are now living in a barren wasteland.

The best solutions are the ones you won't be around to see fail.

By the way... this strategy will work as long as the entire rest of the world doesn't figure it out, keep their tariffs low, and have the supply chain move to them instead. So PLEASE don't let anyone in the EU, Africa, South America, Canada, Central America, or Indonesia see this comment! We only have to keep this secret for another 49.9 years!

P.S. I'm not joking. That's is the strategy he's following.

https://smile.amazon.com/Dictators-Handbook-Behavior-Almost-...

https://www.amazon.com/Innovators-Geniuses-Revolution-Isaacs...

The Rules for Rulers https://www.youtube.com/watch?v=rStL7niR7gs

Protectionism rhetoric is a sugar-coat for Americans who will have to foot the bill by paying more for imported goods, but honestly, who else should?

https://en.wikipedia.org/wiki/United_States_Balance_of_trade

You're saying we should make products in a less efficient and more expensive way to avoid relying on other countries?

And by the way isn't the bulk of our imports raw materials anyway?

I would assume no. If you see the packaging of almost-everything (apart from food/drinks), chances are that they are made in China (and designed in X-Y-Z country).

We have domestic rare earth metal resources. Right now, we don't mine it here, because it's too expensive to get rid of the resulting Thorium. If there was only a market for that stuff...

In this case yes. This is competition between nation-states we're talking about, viewing the entire relationship through the narrow lens of economic efficiency is missing the forest for one specific tree.

Unfortunately, American consumers are unwilling to pay the higher prices such a culture requires so instead economic nationalists try to push the mercantilist bullshit in the name of protecting domestic industries and national security.

Is that all correct?

Not "other countries", just China.

Now, I'm not an us citizen and I don't like Mr Trump particularly, but consider the following: when you say "less efficient" what are you referring to? Is it technology? USA are certainly not behind China on technology. So what is missing to the equation? It's labor. China is so "efficient" because of its ultra-capitalist-masked-as-communist regime. Also, you're not considering environmental impact (that the US, while not excelling at this, actually do consider).

All this (carelessness of environmental impact and no freedom of thought) are basically unfair competition and Donald Trump is right on this initiative.

As a left-leaning person I just cannot understand how is it even possible to accept as the norm the fact that a totalitarian regime like China's has got such a nice treatment so far.

My 2¢

The US is a bigger polluter (per capita) than China. The current administration at the EPA seems to view environmental considerations as hindrances to industry competitiveness.

The EPA has never really bothered that regulate carbon, but they come down hard on the kind of air, water, and soil pollution that exists in China.

Should the USA do more about carbon? Ya, global warming sucks. But the EPA has solved the pollution problem that it was originally envisioned to solve.

As a specific example, the US is (according to Wikipedia at least) second only to San Marino in vehicles per capita (910 for every 1000 people). China is in 73rd place, with a much more modest 154. Electricity consumption is similarly different, with the US' per-capita electricity consumption being triple that of China's (despite China having almost double the total electricity consumption of the US).

If the average Chinese had the same purchasing power as the average American, I can guarantee that China's per-capita pollution would skyrocket to beyond US levels.

It's not just China. There's also Mexico, Canada, Europe ... I don't know exactly the current state of affairs but Trump certainly doesn't punish China because of its bad working conditions.

if so, what is the right way?

But a coal miner learning a new skill/new skills is a lot harder for him than just getting his old coal mining job back... Unfortunately one of those (well maybe both of them) isn't going to happen.

This is just as true for steel manufacturing.

Yes... That's how technological progress works? Countless millions of jobs were lost during the Industrial Revolution, but in there place were new jobs often requiring new (and more) skills. The pace of that turnover has been increasing since the invention of the wheel, one problem now is that we've crossed a threshold where the rate of change is no longer intergenerational but intragenerational.

> I don't know if there is some kind of steady state sustainable economy where enough people have meaningful productive outlets (aka jobs w/o coercive bosses) and we as humans are not extracting or destroying more of the non-human planetary resources than can easily be renewed.

This doesn't exist and has never existed; it's only that the rate of change has come to a point where it's now easily perceived (and financially felt). I would even argue it will never, and should never exist. Should we lessen the impact that this rate of change can have on people's lives? Yes, with better access to social services and education. Should we lessen the impact that the global economy has on the environment? Yes. Should we strive towards some steady, and therefore stagnant, equilibrium? No, absolutely not.

Anyway, the point is that every small bit of technological progress fundamentally changes the economy and that inevitably changes what jobs are needed. Jobs are created and destroyed, it's the nature of progress.

Many human and non-human lives have been sacrificed at the altar of the "cult of progress" and I don't think we should be so willing to think because something has happened for the last 100-200 years (rapid technological change and exponential exploitation of natural resources) that it can go on forever.

The irony is that to compete with China it would be also necessary a huge low cost workforce the US alone cannot provide; too bad Trump just built a wall and enacted laws to keep a good part of that workforce unavailable for hire.

too late.

When those products were made here, it led to toxic chemical plumes and widespread soil contamination around the factories that produced semiconductors. [1]

>I'm sorry to my grandkids who are now living in a barren wasteland.

Trichloroethylene contamination produces heart defects, kidney and liver cancer. You are advocating to literally produce a toxic wasteland. [2]

1. https://www.nytimes.com/2018/03/26/lens/the-superfund-sites-...

2. https://en.wikipedia.org/wiki/Trichloroethylene#Physiologica...

Show me where I said that. Of course not. You seem to be ok with every country that hopes to participate in the technological economy having their own contaminated region.

Step back for a second. Think of the earth like a single-unit closed system. Would we rather have 195 regions contaminated with TCE or one/two?

Your petty nationalism would force those kids to stay in their country AND have them deal with the toxic waste of their protectionist government-subsidized industry because they'll have no other choice but to.

You're also making the argument that somehow we'd have the political will to both institute tariffs that protect the industry AND police those industries when they harm our environment. Guess what buddy, those are contradictory ideals. The USA isn't some magical place where we can defy these incentives.

Your assertion that we'd be better at managing waste here is especially fantastical considering the present EPA chairman. Scott Pruitt has undermined the protection of our environment at every opportunity. [1]

1. https://www.nytimes.com/2017/12/19/health/epa-toxic-chemical...

it seems like a logical implication, unless you're also entertaining the idea of production ending altogether.

> Would we rather have 195 regions contaminated with TCE or one/two?

i'm not sure, would 195 be better, or have some advantages? will all of these 'regions' be identical?

> Your petty nationalism would force those kids to stay in their country AND have them deal with the toxic waste of their protectionist government-subsidized industry because they'll have no other choice but to.

and you advocating that china be the location of choice for toxic waste will surely result in something different?

Petty nationalism will ruin this world. If every country needs its own silicon manufacturing facilities to participate in the tech economy either you’re advocating cutting most people off from the wealth it generates or your advocating for the propagation of toxic manufacturing to every state.

Both positions hurt kids. Hope you can sleep at night.

from what i can discern of your position, i would estimate that your views are harmful. i can sleep fine not agreeing with you.

Most Chinese people lack the freedom to live and work where they choose. Most Americans have that freedom.

So if it is handled here in the US then not only will there be less pollution but far fewer kids would be impacted.

Stop pretending. Learn your history.

https://en.wikipedia.org/wiki/Chinese_Exclusion_Act

this seems to have an a lot packed in. it's not clear how advocating the departure of a minuscule amount of people from china is "helping chinese people" or otherwise demonstrating "care for chinese people".

> Stop pretending. Learn your history. > https://en.wikipedia.org/wiki/Chinese_Exclusion_Act

this seems to be getting really off the rails. this was repealed in the 40s. what's the relevance?

These restrictive laws have roots in the same petty nationalism that fuels protectionist subsudies.

These laws prevent kids - the kids that you claim to care about - from having a better future elsewhere.

No I wouldn't. That makes no sense at all.

You are the person who brought up kids dying. Either you care 10x more about American kids than Chinese kids or your original argument is garbage.

I don't mind if you do care 10x more about American kids - it's a byproduct of our nationalist culture.

The unnecessary, protectionist subsidization and expansion of toxic waste generating industries leaves ALL kids worse off.

Metric or Imperial?

The tariffs seem to be targeted at protecting such companies.

Guys, so what? You think middle America gives a shit your high tech biz is getting hit?

The fact that everyone is building all of this out of China is a terrible sign. The fact that China has grown incredibly quickly by cheating is also terrible. They are number two not because they truly invented, fairly competed, or did anything useful for humanity. They stole all sorts of trade secrets, they continue to do that, didn’t license anything, pushed all of our companies out etc..

I didn’t vote for Trump, but listen to yourselves.

I might vote for Trump on the next one because I really do agree with him on this.

EDIT: downvote me it’s ok, it does not change the fact that you are out of touch and not really looking to hear the other side at all.

EDIT, EDIT: Keep down voting me guys, calling me a racist but it does not change the fact that you aren’t looking to have a dialogue about this.

China has been around for a long, long time and has gone through many phases, including the current incarnation. In this time they have done a great many things for humanity. Including, one could argue, hugely reducing the cost of manufactured goods.

You talk about fairly competing like the US does not massively subsidize many, many industries, undercutting other countries. Not to mention some of the stuff it did in the 80's around south America.

And let's not talk about the fact that the US stole a lot of trade secrets and IP during its industrialization from Britain and other countries.

Feeling threatened by another nation going through its industrialization process and iterating upon it is not a good look, IMO, especially when now the glove is on the other hand so to speak.

Companies have three options:

1. Do nothing in the US except [perhaps] selling the finished product, and use whatever components you want.

2. Use chinese components in US manufacturing.

3. Assemble in the US using no Chinese components.

Given the scenario you've described, presumably #3 > #2 > #1. And right now, almost everything is taking route #1.

So what does this tariff do for companies currently taking route #1? The tariff doesn't affect finished products, so there's no direct impact on them.

If they want to move something to the US, they'll find themselves in #2, the group that's hit with the tariff. Is it a good thing to discourage that?

It also discourages products that are currently america-only from adding chinese components. That might have prevented today's situation if it were enacted in 1980, but it's pretty much irrelevant today.

Also, copying isn't cheating. Copying/imitating is the free market at work.

Donald Trump and your mad about it.

Neither is your comment.

Aviation and top R&D being stolen from Boeing, just in general corporate espionage is rampant just Google it. The kicking out of top tech firms, why is Google not there in China? Why is that fair? China does not play by any rules and therefore they can’t be allowed to play with us.

The purposeful devaluation of their currency, why is that fair?

I could go on and on. I assure you I’m not a Nazi and I really dislike that part of Trumps campaign but man he is so right on this one.

I'm curious if these tariff taxes will meaningfully lower the budget deficit.

I think the consensus on this one was that it wouldn't.

How much of the tech industry goes poof if they decide to stop exporting to the US entirely? Seems like a precarious position.

Put another way that might make more sense to your average HN reader: what if all software came out of China like all hardware does? Wouldn't that concern you? I'd imagine some folks here would struggle to pivot to a new field outside of development.

How much of china's goes puff.

Trade wars are reasonable tools of diplomatic negotiations, and china does break some rules that harm the interests of the U.S.

For example it’s possible some permutation of trade war impacted US tech in the short term yet had the long term effect of reestablishing more manufacturing in the US. This kind of thing has happened, lots of examples.

Remember, China is not a manufacturing leader simply because people are working cheaply. There is a masssive ecosystem, self-reinforcing, supporting new growth, and in general making it easy to get things built there. These elements are critical yet not fundamentally tied to wage discussions.

They have fantastic systems and infrastructure in place to make it all possible at this point, that are mostly independent of what salaries are.

I don’t mean to imply wages don’t matter, they do influence things of course. It’s just that they are a highly visible point of contention compared other extremely important enablers that are not very visible to casual observers, who may still be very vocal on these debates.