Trump Tariffs
“Trade wars are good,” Trump said early this morning.
He’s talking about that because since 2000, American steel production has dropped from 112 million tons to 86.5 million tons.
That’s resulted in steel jobs falling from 135,000 to 83,600.
The lowest paid members of the steel industry are paid $31,450 on average, the highest $113,770. The average pay for the industry is $49,050.
So these are jobs we want to keep, and create more of.
And you know what? Importing steel from other countries ain't gonna create those jobs.
And boy…do we import the steel!
Last month we imported:
- $475 million in steel from Canada
- $475 million from the EU
- $275 million from South Korea
- $225 million from Mexico
- $200 million from Brazil
- $150 million from Japan
- $125 million from Taiwan
Just those 7 countries cost us nearly $2 billion...in just one month.
Now those countries will have to pay a 25% tax on all steel that they import to America. This is the first steel tax since 2002, and that one only lasted two years.
Wall Street is pissed off about this, and stocks are 1.7% lower because of it. To them, a stronger America simply isn’t profitable.
Still, steel stocks went up 7% yesterday.
Remember, people working on Wall Street are so important to our society that we pay them more than teachers, law enforcement, firefighters, and other people that actually do real work.
Republicans are pissed about this tariff talk too, for they know that large corporations and Wall Street flunkies pay for their reelections. If those companies are losing money, it hurts those money-grubbing politicians.
But America made it clear we were sick of those folks, the John McCains and the Mitt Romneys and the Jeb Bush’s of the world.
Those people are losers, old men that just want to benefit their small coterie of friends at the expense of you and your family.
Besides steel, we’ll see a 10% tax on all aluminum coming into this country.
This probably has a lot to do with the U.S. Department of Commerce memo that came out on February 27, one telling us that China sold aluminum foil in the US at 48% to 106% “less than fair value.”
I couldn’t find any hard numbers for aluminum, but we do know that the following countries are the main importers to America:
- Canada
- Russia
- UAE
- China
The big hoopla is that my beer prices will go up now that companies have to use American aluminum to make their beer cans, not foreign aluminum.
I’m not a big fan of the beer industry right now, anyways. Budweiser, for instance, isn’t even an American company anymore…hasn’t been since 2008. Now they’re Belgian.
Supposedly a 10% tariff on aluminum will cost beer producers $256 million a year and could cost the industry 2.2 million jobs.
We'll see.
Canada is a country that’ll be hit especially hard by this.
Mostly, I wish we’d just make more stuff here in America and import less.
Montana has a proud tradition when it comes to the manufacture of aluminum, as I detailed in my book Feds and Farmers.
Montana’s Rich History with Aluminum
It wasn’t until 1888 that aluminum started being produced commercially. Aluminum was first discovered in 1807 and in 1825 a Danish chemist isolated it in the lab. Little was done after that because the metal wasn’t easy to get at. That all changed in 1886 when a new method of “electrolyzing a solution of alumina in molten cryolite,” came about, creating “the possibility of economic, large-scale production.”
That large-scale production came to Montana in 1955 in Columbia Falls with the Anaconda Aluminum Company in charge.
It was clear this would be a good business. Before WWII, the country had produced 371,000 of bauxite a year – the main component to create aluminum – but by 1943 we were churning out 6 million long tons.
In 1943 we produced 920,200 tons of aluminum, even though that industry hadn’t existed just a few years earlier. What’s more, 27% of that metal, or 252,000 tons, was produced in the Pacific Northwest, where the rivers and their dams provided the electricity to make large-scale manufacturing possible.
In Montana, this was the Hungry Horse Dam, which was completed in 1953. Even though all the major ingredients to make aluminum had to be shipped-in from out-of-state, the dam and its cheap electricity made the enterprise profitable.
Hungry Horse Dam
Average employment numbers for the plant remained steady in the 1950s at around 500 to 700 workers, though in the peak year of 1954-5 there were 1,353 workers on average.
The dam created $10.5 million in salaried wages from 1953-5. Most came in 1954-5, when $6.9 million flowed into the local economy. Lumber payrolls also increased, from $5 million in 1950-1 to nearly $10 million in 1955-6.
In 1956 the Aluminum plant paid out $3.7 million in wages. Pay rates for the first workers in April 1956 were $1.98 to $2.68 an hour. Most were getting $2.31 to $2.52 according to the reports.
Still, that was a lot better than the $1.85 an hour that most people in the Flathead were making, and that’s at a time when the high range was just $2.70 an hour, on average. Minimum wage in America at that time was $1 an hour.
By 1959 wages were $2.22 to $3.06 at the plant and $1.98 to $2.65 for the lumber mills, though some lucky folks were making as much as $3.15 in the lumber industry at that time.
Conclusion
It was companies like Columbia Falls Aluminum that made Montana an economic powerhouse after the war.
Remember, we had a strong economy at that point.
From 1950 to 1967, employment in America rose 33%. In the Rocky Mountain States it rose 41%. Montana, however, only saw an increase of 14%.
In that same time period, per capita income in America rose 60% but in Montana it only went up 26%. In 1950 Montana’s per capita income had been 8% above the national average but by 1968 it was 16% below. In 1950 Montana earned 0.42% of the nation’s income but by 1968 this had fallen 0.30%.
What happened?
The main reasons for this decline were threefold:
- Declines in real income per worker in agriculture;
- Stagnant nonagricultural incomes that didn’t keep pace with national increases;
- An overall decline in the number of people working, leading to a greater need for support of those people from the available employment pool…which sometimes necessitates taking workers out of that employment pool to provide full-time, nonpaid support.
Ah…the classic boom-and-bust cycle that Montanans know so well. Truse me - the numbers from the 1980s onwards are even worse.
Can we ever overcome this? Could Montana once again produce major metals in industrial plants…jobs that provide good pay and benefits?
Columbia Falls Aluminum closed down in 2009 and in 2016 it was listed as a superfund site.
Montanans just don’t want jobs like that anymore, ones that could foul the air or water. Instead we choose our ‘poverty with a view’ service industry jobs.
For a lot of the transplanted enviros that made their money somewhere else, this is just fine. They came to Montana to get away from all the noise and pollution, and they don’t want it here. Why should they care if natives can’t make a living?
I don’t have any real hopes that we’ll see heavy industry again here, both because of the enviros and because the GOP deregulated our energy industry, giving us some of the highest prices in the nation.
Why would a company want to operate in that kind of environment?
But Trump’s tariffs have come along, and they’ll create changes in this country. Lots of rich people will lose money, while plenty of rich people will see the writing on the wall, change course, and begin profiting as they help American workers start to profit again, too.
