The Section 232 tariffs made it possible.
Good news for people who like news about more steelmaking taking place in America: U.S. Steel (full disclosure: a member of the Alliance for American Manufacturing) has announced it’s opening a new mill in the United States – a mini mill, to be specific.
That means it won’t be an integrated mill that makes steel from iron ore melted in furnaces fueled by coal, as are most of U.S. Steel’s facilities; it’ll instead use an electric arc furnace that melts recycled steel scrap. Therefore, the steelmaking done there will be a less carbon-intensive process.
All things being equal, this new mini mill (location TBD) is a big undertaking. When finished it will have the annual capacity to make 3 million tons of sheet steel, which is a lot. And the company says it will cost $3 billion to build this operation from scratch, but the steel market is steady enough that its executives are comfortable pulling the trigger on this expansion of its capacity. Here’s a snippet from a story on this news from the Wall Street Journal:
Industrial manufacturers have attributed recent record-high prices to high demand for manufactured goods, as well as tariffs on foreign-made steel. Strong prices and rising profits have allowed U.S. Steel to pay down debt after struggling for years with precarious finances stemming from low steel prices and high costs for maintaining its older mills.
“We have the winds at our backs. Steel prices seem to be sustainable,” Chief Executive David Burritt said in an interview.
This is an encouraging sign for the health of the domestic steel industry, just like Cleveland Cliffs (another AAM member) recent opening of a new $1 billion iron reduction facility in Toledo, Ohio. Both are significant investments, and neither would be happening without the Section 232 steel tariffs in place. After years of low steel prices, production slowdowns and intermittent workforce layoffs these tariffs – first raised by the Trump administration and now maintained by the Biden White House – have given the domestic steel industry the space to bring back mills and rehire American steelworkers.
Ultimately, that’s a good thing. And this mini mill announcement is another example of the tariffs working as intended.
The inaugural gathering of the new council will be held in Pittsburgh at the end of September. There’s a lot for the two sides to discuss.
This past July, President Biden and European Commission President Ursula von der Leyen announced the inaugural Trade and Technology Council between the United States and the European Union. The goal of the new council is to serve as a forum for the two allies to coordinate on issues of trade, economic issues and technology policy, as well as to mutually strengthen global democracy and stand up to autocracy.
The first meeting is scheduled to happen on Wednesday, Sept. 29 in Pittsburgh – and there is certainly a lot to discuss.
When it comes to trade, U.S.-E.U. ties have recently been strained, as ongoing issues such as Section 232 tariffs have caused political fallout. The U.S. and E.U. are working to negotiate a deal on the tariffs, which the E.U. wants to see removed. But both the United Steelworkers union and American steel companies – along with experts at organizations like the Economic Policy Institute — have warned that removing the tariffs without first resolving the ongoing problem of steel overcapacity could put the U.S. steel industry at risk.
Another major flashpoint is the E.U.’s recent proposal for border-carbon tariffs on foreign imports from countries that lack sufficient environmental protections, which stands to harm U.S. producers seeking access to the EU market. Plus, there have been ongoing disagreements between the U.S. and E.U. over how to address China, whose mercantilist, anti-democratic actions threaten the global free market system.
Ahead of this momentous first meeting, we’ve been reading up and preparing for what may very well amount to a critical juncture in cross-Atlantic policy. And our friends at the Information Technology and Innovation Foundation put together a brief with some key issues to consider in the run-up to the conference.
In regards to the conference itself, author Robert D. Atkinson argues that there are two major risks faced by the United States.
One is that too little will come from the conference, as the E.U. will continue to want to “have its cake and eat it too” by refusing to make major concessions — especially when it comes to addressing trade issues caused by China. Alternatively, there is also the risk that too much will come from the summit, especially if the United States concedes policies that make us innovative in order to appease European interests.
“The risk is that the United States will give up too much in order to achieve harmony, as it did this summer in abandoning $7.5 billion in tariffs it had levied on European products in response to unfair subsidies the EU has been giving the aircraft manufacturer Airbus,” Atkinson writes.
Key to the success of U.S. negotiators will be to recognize that the US benefits from a superior system of innovation — largely driven by our legislators’ reluctance to engage in overregulation as many on the European side so often do, Atkinson argues. The U.S. must recognize that the Europeans do not sit on any sort of moral high ground as they often try to claim in regard to their digital privacy rules and views on the role of government and corporations.
American values are in no way inferior to European ones, and especially when it comes to the issues that matter such as defending global democracy and leading the global economy, the U.S. often has better policy.
Nowhere is this more true than in U.S.-E.U. trade, Atkinson argues. There is no reason for the U.S. to import Europe’s rules, or even do more to harmonize them. Instead, the two countries need to make sure that their policies are interoperable.
But what will be key is that the United States gets more European support for standing up to China’s government economically, which the E.U. has thus far been reluctant to do. Both the United States and the European Union recognize the threat posed by China on many fronts.
The U.S. cannot continue to bear the brunt of economic retaliation while the E.U. continues to increase their market share with China’s regime, which is causing so many of the problems endemic in today’s global trade landscape.
“It would be ideal if the E.U. were to unequivocally join the U.S. to limit Chinese innovation, mercantilism, and digital authoritarianism,” Atkinson writes, “but if the EU takes even limited measures toward that goal, it would be a success.”
Read the full brief, Advancing US Goals in the US-EU Trade and Technology Council.
The American Mask Manufacturer’s Association, formed this year to strengthen domestic manufacturing of PPE and its related supply chains, is warning its members risk going out of business if policymakers don’t act.
Think back to the start of the COVID-19 pandemic in the United States.
The U.S. was terribly unprepared. The country didn’t have enough personal protective equipment like face masks, and years of relying on imports meant that we didn’t have the means to quickly ramp up production, either. Meanwhile, China’s government stopped exporting them, which meant there wasn’t any way to get masks, either.
The real world impacts were devastating. Medical personnel at the front lines of the virus found themselves reusing equipment like N95 masks, despite the dangers. A black market quickly formed. Clothing manufacturers like American Roots and American Giant shut off their normal production lines making hoodies and started making face masks.
It was a major lesson about the consequences of becoming too dependent on imports, and one that was learned the hard way. But the only silver lining seemed to be that it also appeared to be a turning point, as there was widespread bipartisan agreement that the United States needed to reshore and ramp up its critical manufacturing capabilities, especially for things like PPE.
Flash forward to today. The COVID-19 pandemic roars on, but both surgical and N95 masks are plentiful, in part because American manufacturers large and small did their part to ramp up production of the equipment. Many of these companies started from scratch, aiming to help their fellow Americans and ensure that the country is better prepared moving ahead.
But now many of those Made in America mask makers are under attack. If policymakers don’t act, the United States could end up right back in the terrible, no good very bad place where it started.
China’s government has lifted its export restrictions on its face masks, which are heavily subsidized and priced far below market value. Some Made in China masks are being sold for as little as a penny per mask. That’s unfairly undercutting American mask producers, who abide by stricter labor and environmental guidelines and operate in a free market. More than 6,000 U.S. workers hired to make masks during the pandemic have lost their jobs as a result of China’s unfair practices.
(We’ll also note that many Made in China masks also have been found to be deficient and unsafe. The FDA last year banned 65 medical manufacturers from selling their Chinese-made N95 masks, while the Justice Department has even charged one company with selling a defective product.)
But despite the dangers, Made in China masks continue to sell in the United States, and the U.S. is playing right into the hands of the Chinese Communist Party. It’s all part of the CCP playbook: Heavily subsidize a product and price it so cheap that the competition is eliminated. Then, control the global market.
We’ve seen it time and time again, from electronics to steel to electric buses to clothing. And China controlled the PPE market for so long, it is just invoking the same strategy to dominate once again.
The CCP is not likely to change its ways any time soon, but that doesn’t mean the U.S. is helpless, either. There’s a lot that we can do to counter China and strengthen our domestic manufacturing of PPE.
The American Mask Manufacturer’s Association (AMMA), a group of more than two dozen independent American mask manufacturers, formed in March to push for policy to strengthen domestic manufacturing of PPE and ensure these companies can survive long-term. And the AMMA is arguing that it is time to level the playing field for American producers.
Right now, the U.S. Trade Representative (USTR) is accepting public comments on exclusions to “Section 301” tariffs on Chinese imports. Certain Chinese-made products, including PPE, were exempted from the tariffs at the start of the pandemic as the U.S. needed to secure as much as possible.
But now that there’s a domestic manufacturing industry for face masks — and Chinese producers are heavily undercutting American companies — it’s time to end those exemptions, according to the AMMA.
Politico Morning Trade reported that the AMMA urged USTR “to close the exemptions for face masks, saying its members are ‘getting KILLED by China.'” The group told USTR that tariffs won’t solve the problem entirely, but will “at least help American producers a small amount.”
Some mask makers argue that continued dependency on imports at all is a national security threat, and its time to stop importing masks altogether. Prestige Ameritech vice president Mike Bowen told CNN that “any plan that government has that allows foreign masks in the US will fail to secure the supply chain.”
At the very least, the U.S. government shouldn’t be spending taxpayer money on foreign-made masks when there are plenty of U.S. manufacturers and workers ready to do the job.
The National Council of Textile Manufacturers (NCTO) is among the organizations calling for strong procurement policies to require the government to purchase Made in America PPE, including for the national stockpile. Putting this policy in place now will ensure that American producers have a stable customer base once the pandemic ends for good — and will be positioned to ramp up production when the next crisis hits. In addition, the NCTO is advocating for federal incentives for private sector purchases of American-made PPE, along with funding to rebuild supply chains.
The Biden administration has acknowledged the need to shore up PPE production, both of the equipment itself and related supply chains. President Biden signed an executive order in February examining supply chains, and the president reflected on the PPE shortages during the pandemic.
“We heard horror stories of doctors and nurses wearing trash bags over their gown — over their dress in order to — so they wouldn’t be in trouble, because they had no gowns. And they were rewashing and reusing their masks over and over again in the OR,” Biden said. “That should never have never happened. And this will never happen again in the United States, period. We shouldn’t have to rely on a foreign country — especially one that doesn’t share our interests or our values — in order to protect and provide our people during a national emergency.”
American workers and manufacturers stepped up to make PPE during the darkest days of the pandemic, and now both the Biden administration and Members of Congress must make good on their promises and ensure American production of PPE continues. In the meantime, all of us can do our part to support Made in USA mask manufacturers by purchasing American-made N95 and other face masks. We’ve put together lists of Made in America mask makers here, here, and here.
After a marathon 15-hour session, the House Transportation and Infrastructure Committee approves bill to invest $60 billion in infrastructure.
The House was back in session Tuesday, as the Transportation and Infrastructure Committee met to advance its part of President Biden’s Build Back Better proposal. And after a 15-hour markup, the panel voted 37-29 to move the legislation forward.
The specific legislation passed by the committee aims to build off of the Senate-passed bipartisan infrastructure bill and constitutes the “soft infrastructure” portion of Biden’s Build Back Better Agenda. It includes items like $10 billion to support access to affordable housing; $4 billion to reduce carbon pollution in surface transportation infrastructure; and $9.5 billion to provide investments in economically distressed communities.
“From tackling climate change, to addressing racial and environmental injustices, to building back better after the COVID-19 pandemic, our nation faces big challenges,” said Chairman Peter DeFazio (D-Ore.). “By advancing this legislation, we’re taking a key step forward in addressing those challenges.”
The committee advanced several other infrastructure measures earlier this year, including the INVEST in America Act, which allocates $547 billion for surface transportation infrastructure like roads, bridges, and transit systems.
It’s a busy week in the House, which is working to get infrastructure investment done. While the $1.2 trillion bipartisan bill passed by the Senate enjoyed support from both parties, Democrats also are aiming to advance a $3.5 trillion budget reconciliation package, which will allow Congressional Democrats to pass their priorities in one of the few procedural vessels that will alleviate the threat of a filibuster. However, with thin margins in both chambers of Congress and little chance of House Republicans agreeing to anything, Democrats must corral near-unanimous support for their bill within their party, making it a challenge for individual members to get their priorities passed.
On top of it all, the committees are rushing to finish their portions of the budget in the House by Wednesday, with the goal of passing the final budget bill through the House by the end of September. It’s made for long nights of work for the Congressmembers and their staffs, but for members like DeFazio, it was also a motivating factor.
“The sunrise was colorful, and it was colorful because of the smoke in the upper atmosphere from the western United States,” he said, segwaying into the provisions in the bill to invest in infrastructure that will be resilient against climate change and ensure that the US is a leader in the production of electric vehicles, solar panels, offshore wind, and other mechanisms to leading the renewable energy industry.
“The investments included also make sure that we are funding climate resilient infrastructure and reducing harmful greenhouse gas emissions,” added Rep. Salud Carbajal (D-Calif.). “This legislation will jumpstart our current efforts to reduce the current backlog of infrastructure needs throughout our country, and bring our roads and bridges to a state of good repair.”
These climate provisions will be important, as they were largely absent from the Bipartisan Infrastructure Bill and represent an opportunity for the United States to finally compete against countries like China in industries where investment is badly needed. For American workers, that means reshoring jobs, and leading the development of nascent industries, guaranteeing good-paying manufacturing jobs for the next generation of American workers.
But some members of Congress also urged caution, recognizing that we cannot make investments in green energy without also ensuring that we do not buy products from countries like China, and risk American taxpayer dollars from subsidizing state-owned enterprises who have been credibly accused of using forced labor in their facilities.
“The United States can and should be a leader in the design and manufacture of electric vehicles,” said Rep. Jeff Van Drew (R-N.J.). “However, because of decades of globalism and economic mismanagement have resulted in weakened supply chains…that leaves the United States vulnerable to malicious actors like the Chinese Communist Party.”
Negotiations on the budget will continue through September and likely October as the rest of the committees finish their portions and send it off to the House and Senate floors. After that, a fiscal cliff is looming — so stay tuned to this blog for all the updates you’ll need about Capitol Hill as we continue to work to ensure that these bills keep American workers at their center.
Boone explains how Section 232 helped revive steel mills across the country, along with the businesses and communities that surround them.
Dan Boone has worked for 49 years at the Cleveland Works steel mill, located on the Cuyahoga River in Cleveland, Ohio. He has seen the peaks and valleys of steelmaking, whether it be the 1980s lull in American steelmaking or the global steel overcapacity crisis that led to tens of thousands of layoffs and dozens of plant closures in the 2010s.
Throughout his career, Boone has always viewed the prosperity of the American steel industry as cyclical. Some good times, some bad times. But he has reason to believe that after he is long retired from his career-long steelmaking job, American steel producers will continue to thrive.
His reasoning is the Section 232 steel tariffs that were implemented in March 2018.
Boone believes the application of the 25% tariffs on imported steel gave the United States a much-need tool to combat the dumping of cheap foreign steel into the market from countries like China, Russia, Vietnam, Brazil, and even the European Union.
Since the Section 232 tariffs went into effect, the American steel business has rebounded. Steel mills that were on the verge of collapse just a few years ago have rallied to restart production, recall laid-off workers, and hire new workers for well-paying United Steelworkers (USW) jobs. Steel communities are also feeling the positive impacts.
“People are benefitting from the 232s that have nothing to do directly with the steel industry,” Boone said. “It’s those peripheral jobs. They are not connected with us, but they work for a company that supplies us or hauls our product and things like that.
“The tariffs have been absolutely good for us, and not only for us, but for every job in the steel mill, where there are three to five peripheral jobs that are supported by us, too, whether its truck drivers, suppliers, shipping. All of that is tied into us.
“Even the local restaurants, some of which went out of business in 2001 when the mill shut down. All of that and us working supports the tax bases for all of the surrounding cities and we go out and spend that money and other people benefit, too.”
Not that Cleveland Cliffs employees aren’t seeing the benefits. The company just paid out profit sharing for its employees because of the recovery in steel prices, Boone noted. Orders are up at the plant in Cleveland and across all of the Cleveland Cliffs facilities right now, he added.
But while things are looking up for American steelmakers and workers, the global steel overcapacity crisis remains unresolved, as foreign governments like China continue to use heavy subsidies and state-owned enterprises to create too much product, which is dumped onto the market at prices far below their fair value. The Economic Policy Institute warned earlier this year that “jobs, national security, and the steel industry itself are at risk if Section 232 measures are discontinued or weakened” without first resolving these longstanding issues.
“We can’t compete with steel from China when they get government subsidies,” Boone said. “If they took off the 232 tariffs, we would be headed down the same path that we did in 1991 and the decades after that. In my opinion, dumping would just start up again without the tariffs, and it’s going to drive prices of steel down and we’ll have a race to the bottom.”
Boone continued: “Countries like China were making steel and selling it here in the U.S. for less than we could even make it, and the quality was inferior. The Chinese government is propping up its steel industry and subsidizing their steel companies, which is totally illegal in the United States. They were just dumping it here and their quality is not like ours.
“I don’t think we’d be in the position we are in currently without those tariffs.”
Boone began working at the Cleveland mill in 1972 right after he graduated high school. Boone has weathered ownership changes that included Republic Steel, ISG, Mittal, ArcelorMittal and now Cleveland Cliffs, which purchased the historic facility in 2020.
Boone is proud of his long career as a steelworker and the financial benefits and job security it has given him and his family. He is a married father of two adult sons and is grateful for the lifestyle his steel mill work has afforded him.
“We enjoy a very nice middle-class standard of living that allows us to enjoy other activities that we may not otherwise have been able to enjoy if I had a job that didn’t carry the wages and benefits that we have,” Boone said. “We have a very nice standard of living, and I have the Steelworkers to thank for that.”
Boone’s steel mill career has certainly been a long and winding road, as he has worked in almost every department at the Cleveland Works mill. In February 1972 he was hired into Cleveland’s most productive mill as a laborer. In subsequent years, he worked as an electrician, a crane operator, maintenance at the blast furnaces, in the coke plant and production in almost every other department.
When he was first hired at Cleveland Works, there were about 12,000 people working at the 1,000-acre facility. Today there are approximately 1,860 employees at the mill, 1,520 of whom are hourly workers.
“People don’t realize how far the roots for the 232s go,” he said. “It helps more than steelworkers. It’s one of those things where the words ‘trickle down’ actually works for me. It’s not like the Reagan trickle down economics where nothing really trickled down. People don’t even realize that they are benefitting from something like these 232 tariffs.”
Boone has been actively involved in the USW and became vice president of USW Local 979 in 2006. He then served two three-year terms as Local 979 president, and earlier this year was appointed contract coordinator for the Cleveland USW.
Boone’s valuable experience at the mill has given him an insight to the importance of being a Steelworker that can get overlooked by those who don’t realize the wide-ranging effect Steelworkers have on their communities.
“I would like to see these tariffs expanded beyond steel. There is a lot of things that we don’t make here in the U.S. anymore that we could. Go buy a Huffy bicycle,” Boone said. “There should be a lot of things like that, too. Buy American with American-made steel. With the 232s, just knowing there is a little bit of security that helps make a decision for people to make a major purchase a little easier.”
Boone is especially proud of the advanced high-strength steel that is manufactured at Cleveland Cliffs’ main facility that has easy access to the Port of Cleveland and Great Lakes shipping transport. Its two blast furnaces and continuous caster produce more than 3 million tons of raw steel annually that is used in the automotive industry, appliances, construction and a wide variety of other steel-based products.
“A lot of our advanced high-strength steel is going into making automotive frames,” Boone said. “My Ford F-150 has high-strength steel in the frame. Things are good right now. Our larger customers are the automotive industry.
“Right now, our advanced high-strength steel that we make in Cleveland, well, we are one of the leaders of advanced high-strength steel in the world, not just at Cleveland Cliffs. It is some of the best steel in the world.”
That is not only a positive for Ohio residents but for people in steelmaking cities across America. The Section 232 tariffs have allowed America’s steel companies to not only hire more workers into good-paying USW jobs but have spurred massive financial investment into our countries aging steel mills. This financial security has also allowed the American steel industry to invest in cleaner, environmentally friendly manufacturing.
“I think the thing a lot of people miss with all of this is the tie-in with global warming,” Boone added. “In our plant alone there has been billions of dollars put into the environmental aspect of how we make steel.
“We have clarifiers. We take water out of the river and put it back and it is twice as clean as when it came out. The American steel producers have put billions of dollars into its mills to make the environment better, and meanwhile in China they don’t give a damn. We make the best steel, and we make it responsibly as far as the environment is concerned.”
But that all would be at risk if Section 232 is revoked before the larger steel crisis is resolved.
“Without a doubt, the 232s have helped slow down the amount of imports,” Boone said. “Look at the steel companies that have shut down in the last 20 years. Companies have restarted production and new companies have opened and things have been going great for the industry since the 232 tariffs.
“A big catchphrase for me, and I would say for the Steelworkers, is: ‘We believe in fair trade, not free trade.’ On a fair basis, we believe we can compete with anybody in the world.”
Take Action for Steelworkers Like Dan Boone: Tell President Biden to Stand Up for Made in America Steel!
It’s no secret China’s government poses emerging risks to U.S. economic and national security, and a panel convened by the U.S.-China Economic and Security Review Commission discussed what to do about it.
As frequent readers of this blog know, the United States faces a major threat in terms of industrial production from the People’s Republic of China.
The Chinese Communist Party (CCP) is alleged to have conducted a host of anticompetitive, illegal violations of international law that have led to millions of lost jobs, along with threats to American economic and national security. But while the United States has adopted a tougher stance on China in recent years, it has yet to enact the exact mix of policy needed to effectively counter these threats.
And tensions are high. The White House revealed that President Biden on Thursday took part in a telephone call with China’s leader, Xi Jinping, only the second time the two had spoken since Biden took office. Few details were revealed, but it’s safe to assume there wasn’t a ton of progress made.
In the meantime, the United States needs to find ways to address the emerging risks. The U.S.-China Economic and Security Review Commission examined just that during a day-long hearing on Wednesday — and the experts who testified before the commission were blunt in their assessments.
For one, the United States – and indeed, many of its allies – must finally give up the idea that doing business in China will help the situation.
One of the panelists, international attorney Dan Harris, noted that “China cares about both foreign investment and its own economy, but only to the extent that those bolster CCP power and help ensure its survival.”
The CCP encourages U.S. companies to do business there, but uses their investment as a means to an end to support its government — with no regard for the ill effects of their actions on American workers and consumers. In the meantime, the CCP demands companies hand over their intellectual property to gain market access, which it can cut off at any time. Everyone from small, independent-owned companies to giant Hollywood movie studios has been burned as a result.
“The U.S. government should encourage U.S. companies — and even companies from other countries — to cease doing business in or with China, especially manufacturing,” Harris advised.
It’s not just companies that operate in China that face risks, of course. American workers and companies that do business solely in the United States — and play by the rules — also have been burned by the actions of the CCP.
China has been accused of illegally subsidizing many of their domestic industries in order to make them competitive internationally — including in steel, rail rolling stock, shipbuilding, solar panels, and other sectors. China has been accused of using forced labor to manufacture products, particularly textiles, including labor from Uyghur internment camps that provide contracts for multinational firms. China has also been accused of stealing intellectual property from foreign companies that do business there, and giving those stolen trade secrets to their own companies to out-compete the inventor of the technology. And China has been accused of mining data and surveilling foreigners — which has posed a major security concern as companies like Huawei attempt to dominate the global 5G rollout.
For American workers, however, these concerns are personal. Companies have been offshoring for decades, often moving production to China where they enter into a faustian bargain to comply with China’s illicit rules to increase their profits. The end result has been the loss of millions of American manufacturing jobs, longer supply chains, and our national security threatened by a foreign government that lacks a real commitment to human rights.
Another issue is that “the PRC seeks U.S. technologies to further its military modernization, such as through diverting items from civilian to military applications… creating illicit procurement networks, and stealing intellectual property,” according to Jeremy Pelter, the acting undersecretary and deputy undersecretary of the Bureau of Industry and Security.
So what can policymakers do about it?
Kevin Wolf, a former assistant Secretary of Commerce for Export Administration during the Obama administration, urged the expansion of export controls to stop American companies from offshoring critical supply chains, particularly those of strategic importance.
“Export controls could be used in new ways to address China-specific policy issues,” he said.
Unfortunately, one major theme that came up during the discussion is the fact that many U.S. agencies and regulatory frameworks designed to counteract Chinese malfeasance are not up to date or not capable of being enforced properly. “The multilateral export control regimes…do not have, with rare exceptions, the mandate or legal authority to address supply chain security [and] intellectual property theft,” Wolf explained.
Another panelist, David R. Hanke of the National Security Institute at George Mason University Antonin Scalia Law School, discussed FIRRMA — one of the U.S. government’s chief legal tools to review foreign investments, which he argued was not sufficient.
“Unfortunately, FIRRMA can never have its true intended effect until either the process for controlling emerging technologies and foundational technologies is carried out as Congress envisioned or Congress enacts a better approach,” Hanke said.
But that’s not to say those issues cannot be addressed, and policymakers in Washington must work to ensure that the United States is able to counter the economic threat posed by China.
As Hanke put it, “the onus is on Congress to assess the causal factors and decide on appropriate actions.”
Watch the full U.S.-China Economic and Security Review Commission hearing here.
Rawlings, which is partly owned by MLB, is planning to close a longtime factory in Minnesota. Local residents are crying foul.
Tucked away in the southeastern corner of Minnesota, nestled along the Mississippi River, the people of Houston County take great pride in their community. Over the years, hundreds of Caledonia residents furnished Major League Baseball with batting helmets, softball bats, and other assorted sports items. The Miken Sports Plant, just a drive away from the infamous “Field of Dreams”, has been a staple of everyday life in Caledonia — that is, until Miken’s new benefactor, Rawlings, informed management of the plant’s impending closure.
In the next 18-24 months, all but a handful of Caledonians, working in customer service and support roles, could walk out of the factory doors a final time.
The story is unfortunately an all-too-familiar one in recent American history: Rawlings, a multi-national manufactory and distributor of sports equipment, acquired the Miken Sports Plant, and now plans to move the Caledonia jobs to China. But it’s not just the corporate types at Rawlings, which is owned by private equity firm Siedler Equity Partners, who have a stake in the decision. Further up the corporate ladder, Rawlings is partly owned by Major League Baseball (and the Siedler family even owns the San Diego Padres).
As State Rep. Greg Davids told Minnesota television station KARE-11: “Think about that – the American pastime moving to China. Really?”
This is far from the first time a community has been shuddered by a plant shutdown, of course. According to the Bureau of Labor Statistics, Minnesota has lost a net 27,000 jobs in the manufacturing sector since 1994 – but the sting of a quintessential element of Americana moving overseas struck a nerve with many local residents.
Local, state, and national officials have banded together to seek a solution that maintains Caledonia’s premier production facility. Following a virtual city council meeting, Minnesota Sen. Tina Smith (D) penned a letter to MLB Commissioner Bob Manfred to formally lodge her protest of the decision.
Smith noted, among other items, that the MLB greatly benefited from exemption from United States’ antitrust laws, taxpayer-funded stadiums (Minnesota taxpayers, for instance, paid nearly $350 million for the Twins’ state-of-the-art Target Field), and insisted that the tacit relationship between the national government and the national pastime depends on good faith from both sides.
“Caledonia has a population of about 2,800 and will face significant hardship from the loss of Miken’s jobs and community contributions,” Smith wrote. “Adding to my outrage is the fact that you will reportedly be moving Miken’s bat production to China, which flies in the face of MLB’s status as an iconic American sports league. I strongly urge you to reverse the planned closure of the Miken Sports production facility in Caledonia and instead commit to making long-term investments in the plant.”
When pressed, an MLB spokesman artfully dodged assertions that the move had violated the league’s “Made in America” pledge by noting that the production of baseball bats used by MLB will be folded into the operations of a St. Louis company.
“MLB does not have a role in the day to day business operations of Rawlings, particularly with respect to items that are not made for MLB use,” a spokesman for the league told CBS News. “The sole MLB product made in this facility will continue to be manufactured in the United States as are all MLB batting helmets, on-field uniforms and hats.”
Rawlings spokesperson Mike Thompson expressed mild empathy for workers, calling the decision to close the Caledonia plant “painful”, but well worth it, seeing as the bats and other equipment would be made in a Chinese facility that would save shareholders somewhere between $4-10 million.
But for Caledonia, the impact is devastating.
The effects of COVID-19 not-withstanding, the Miken Sports Plant had employed near 100 workers at any given time, providing good pay to good people, and a great incentive for skilled workers to put down roots in the rural area. (As the Voice in “Field of Dreams” said: “If you build it, they will come.”)
And Miken’s closure was far from inevitable. Many companies that partner with MLB share a commitment to “Made in America,” including Louisville Slugger bats (Made in Kentucky) and Schutt bases (Made in Illinois).
Then there’s glove manufacturer Nokona, which manufactures its line of top-quality gloves in Texas. This family-owned and operated baseball glove manufacturer, a favorite of Nolan Ryan, has stood firm in the face of offshoring since the early 1960s. Despite the tempting allure of what Senator Smith would describe as a “dollar first” idea, Rob Storey quotes his grandfather: “If I have to import gloves and tell my employees we’re closing up and they don’t have jobs anymore, I might as well grab a bucket of worms and go fishing.”
It seems that at least some of the heat from public pressure has caused Rawlings to sweat, as they now appear willing to “continue discussion” on the future of the Miken plant, though no promises were made. And local officials say they’ll keep pushing the company to reverse its decision.
Tens of millions of hardworking Americans, generation after generation, have gleefully spent their hard earned money to support America’s pastime. Kansas City Royals player Salvador Perez recently noted: “You don’t know how hard people worked, or whatever they have to do to buy a ticket to come to see you. We need to respect the fans, too.”
That’s why it’s not just Rawlings that could make things right; Major League Baseball also could step up for the people of Caledonia, too. Otherwise, like Ray Kinsella, the people of Houston County will wonder what life was like when baseball electrified their town.
As the Mayor of Caledonia put it: “I think they’re gonna lose a lot of fans.”
China now dominates global solar production, including by using forced labor. Can President Biden get the U.S. solar manufacturing industry back on track?
The Biden administration on Wednesday announced an ambitious new plan that would see nearly half of the nation’s electricity come from by solar energy by 2050. While it’s a noble idea, given the very real need to reduce carbon emissions to avoid the worst impacts of climate change, the specifics about how President Biden plans to implement this plan are scarce.
And here at the Alliance for American Manufacturing, we have one big question: Who exactly is going to build all of those new solar panels?
As I outlined in on the blog back on Aug. 25, America’s solar industry provides a case study for how the promise of a robust domestic manufacturing base for a new technology can go wrong. Despite billions of dollars in investments and the support of both the Bush and Obama administrations in the first decade of the 21st century, the U.S. has now lost much of its solar industry to China.
The U.S. once made 22% of the world’s solar panels. That number now stands at 1%.
China’s government utilized massive government subsidies, lax environmental standards, and forced labor practices to make its solar panels. It built up its domestic supply chain and kept coal power plants open to supply cheap electricity to make the panels. Then, it dumped its artificially cheap solar panels onto the global marketplace, suppressing U.S. solar manufacturers who abide by strict labor and environmental standards and free market rules.
As a result, American solar plants closed. The U.S. is now heavily reliant on China for its solar needs, which creates a real dilemma for Biden’s solar ambitions, given the fact that there’s strong evidence that China utilizes forced labor throughout its solar industry.
Should the United States build out its new solar panel installations with Made in China products, we will be complicit in a genocide. As Horizon Advisory researcher Emily de la Bruyere told AAM:
“As long as we in the U.S. continue to build our solar industry on Chinese sources, we are building on a foundation of forced labor. Global consumers of Chinese polysilicon-based photovoltaic and semiconductor goods implicitly support the sustained abuse of ethnic and religious minorities in China.”
The Biden administration seems to understand this, as it has issued bans on solar products from the Xinjiang region of China, citing the government’s use of forced Uyghur labor in the region.
But bans are not enough; the United States also must start producing a lot more solar panels as an alternative to Made in China products. If Biden wants to do this right, the United States needs to get to work on revitalizing its fledgling solar industry and growing domestic production, not just of solar panels themselves but of the supply chain needed to support all those new installations.
Right now, though, it’s unclear how that will happen. Much of Biden’s solar panel plan is unknown, and the New York Times reported that many “details will ultimately be decided by Congress.”
The bipartisan infrastructure legislation, recently passed by the Senate and headed for a vote in the House, offers some clues about what Congress may do. While the legislation includes $73 billion for clean energy transmission, it also left out a number of other clean energy provisions that were originally found in Biden’s American Jobs Plan.
The U.S. simply isn’t doing enough right now to compete. If Biden wants the United States to get 45% of its power needs from solar by 2050 – it sits at just 4% right now – Congress is going to need to get serious about investing in this critical sector and ramping up domestic solar production. Much more investment will be needed to scale up domestic industry, not only to meet Biden’s 2050 goal but also to ensure America’s solar future is Made in America.
And at the same time, the U.S. will need to use its trade tools to ensure a more level playing field for U.S. solar workers and manufacturers. Indeed, trade actions are perhaps the one thing that has allowed the U.S. solar manufacturers that remain to survive.
Tariffs were first placed on solar imports from China in 2012, and the Trump administration applied them to imports from all Chinese-owned companies in 2018. American solar manufacturers Auxin Solar Inc., and Suniva Inc. recently asked the International Trade Commission to extend those tariffs for four more years, and a group of U.S. solar manufacturers also filed recent petitions requesting investigations into Chinese companies that they say are circumventing tariffs already on the books by making products in places like Malaysia, Vietnam, and Thailand.
According to the Wall Street Journal, since tariffs were imposed solar panel production in the U.S. has tripled. First Solar Inc., cites the tariffs as a reason it could expand production; Auxin said the tariffs helped it stay in business.
Giving these companies an opportunity to succeed – and encouraging others to invest in the United States – must be part of the plan. And Biden is a guy who always has expressed a desire to help America’s working men and women. Indeed, the president welcomed labor leaders and union members to the White House on Wednesday, telling them that “we’re going to build back better. We have to, we must, we will. Because that’s who we are. That’s what America is.”
A major transition to solar-powered electricity provides a historic opportunity to do just that. But we’ve got to do it right by investing in America’s workers and manufacturers to ramp up domestic solar production and strengthen supply chains. Otherwise, Biden will merely transition the U.S. from a country once dependent on foreign oil to one reliant on Made in China solar panels.
It’s critical for the United States to maintain “effective trade measures to prevent new surges of steel imports fueled by global overcapacity” — including from our allies.
The United Steelworkers (USW), American Iron and Steel Institute (AISI) and Steel Manufacturers Association (SMA) sent a letter to President Biden on Friday urging him to keep trade measures in place to prevent a flood of steel imports that could threaten hundreds of thousands of jobs and the stability of a critical American industry.
And here’s where things get interesting: The signees point to the European Union as a key contributor to the global problem of steel overcapacity.
Yeah, I know! You were probably expecting me to say there’s worry about China’s steel overcapacity, right?!?
While China is indeed the chief contributor to the global steel overcapacity crisis — and could probably step up to help resolve it, as we outlined in full detail on the blog last week — other countries also are contributing to the problem, including many of America’s allies in the European Union.
But instead of fixing the problem at hand, the E.U. is also actively pushing the United States to drop Section 232 tariffs on its steel exports. And they’ve gotten the Biden administration to the table.
In May, the U.S. and E.U. issued a joint statement announcing diplomatic discussions to “address global steel and aluminum excess capacity” and “partner to promote high standards, address shared concerns, and hold countries like China that support trade-distorting policies to account. ”
Lifting the tariffs on E.U. imports now, however, could seriously jeopardize the future of the American steel industry at a critical time. The global steel overcapacity crisis led to mass layoffs and plant closures at steel facilities across the country, but Section 232 trade action allowed the industry to stabilize, creating at least 3,200 new direct jobs and $15.7 billion in investments in new or upgraded facilities.
The Economic Policy Institute cautioned in March that lifting Section 232 without addressing the fundamental problem of overcapacity “would put the U.S. steel industry at risk, imperiling new investments and hundreds of thousands of good jobs in steelmaking and in other indirect and induced jobs supported by steelmaking activity.”
And make no mistake: The E.U. is contributing to that fundamental problem.
As the letter notes, the firm McKinsey & Company reported earlier this year that the European steel industry needs to reduce its excess steel capacity by 25-30 million metric tons to achieve a sustainable capacity utilization rate. But certain E.U. governments have instead “announced aggressive new subsidy programs for the steel industries, which will distort competition and exacerbate the ongoing excess capacity crisis.”
On top of that, some steel imports from the E.U. “contain steel that has been melted and poured in a number of non-EU countries. For example, millions of tons of semi-finished steel from Russia, Ukraine, China and elsewhere enter the EU every year to be rolled, finished, and exported – all too often to the U.S. market,” the signees write.
In fact, there already are “22 existing antidumping and countervailing duty orders in place on EU steel products to address the unfair competition that has often plagued our relationship,” the signees tell Biden.
“Accordingly, while we support efforts to discuss with the EU how to work together to address the steel overcapacity crisis, the administration must at the same time maintain effective trade measures to prevent another import surge from the EU that would destroy good paying jobs, undermine our industry, and increase the carbon footprint of
U.S. steel consumption,” they continue. “These measures must be implemented on a product- and country-specific basis and ensure that stringent, effective tariffs will be automatically imposed if steel imports from the EU surge above a non-injurious level. This is exactly what the EU has done with regard to its own market by extending for another three years its steel safeguard measure, which imposes a tariff rate quota on steel imports from all around the world.”
While the Biden administration will focus on diplomatic efforts over the next few months, it’s important to keep in mind that there’s a bit of politics at play here, too. AAM President Scott Paul recently pointed out to Politico that many steel facilities are located in key swing states like Ohio and Pennsylvania, and “simply lifting steel tariffs without any solution in place, particularly beyond the dialogue, could well mean layoffs and plant closures.”
That almost certainly would lead to political consequences. Kameen Thompson, president of USW Local 9462 in Pennsylvania, put it succinctly: “If [Biden] just takes them off and lets them just go cowboy on us and just roll in here, then that’s not a good look. And I’m pretty sure my members, and the top members in USW, would not be happy with that.”
The Biden administration is going to face a lot of pressure from E.U. officials to lift Section 232 tariffs. And the United States will need to work with its allies in the European Union to take on China’s government, not only on steel overcapacity but other key trade issues — plus critical national and economic security matters. So it makes sense that Team Biden wants to resolve this issue.
But as the USW, AISI and SMA point out, it’s also vital that action be taken to ensure the stability and long-term survival of our domestic steel industry, too.
“There are many ways in which the U.S. and the EU can work together to address this common challenge, including through the establishment of stronger international trade rules against subsidies and other forms of market-distorting
government intervention,” they write. “But these forms of cooperation cannot substitute for maintaining effective trade measures against import surges, including from the EU, that jeopardize our production, national security, economic health, critical infrastructure and jobs.”
Click here to read the full letter.
There’s no doubt the past year and a half has been challenging. But it’s also created opportunity.
Over the past 18 months, transformational change has swept across America. Some of it welcomed, some not so much.
That change has impacted working people in profound ways, making many Americans oddly feel both more disposable and essential at the same time. Labor Day offers us a chance to take stock of a few of the lessons related to manufacturing jobs that we have learned, or should at least consider, and what they mean for the future of work.
The job market may never be the same. That sudden shock to employment at the start of the pandemic hasn’t completely abated. Manufacturing, for example, is still 378,000 jobs short of a full recovery. At the same time, wages for nearly all workers are rising at a better rate, more Americans are searching out better job opportunities, and the public opinion of unions is at a generational high.
While there is still much work to do, this healthy rebalancing was long overdue. Many corporations spend serious money on ads extolling the virtues of essential workers. The far more important metric will be how these same companies treat workers, where they locate production, and whether they call out the government of China for cultural genocide, forced labor, and other human rights abuses.
Much of that worker-business rebalancing must be supported by a presidential administration that puts the interests of working people front and center. Thus far, the Biden administration is doing the right kinds of things. For manufacturing workers, I see that reflected in policies such as Made in America procurement, investment in infrastructure, bans on imports of goods made with forced labor, supply chain resiliency, and trade enforcement. President Biden also has chosen his cabinet members to reflect these worker-centric priorities, from Labor Secretary Marty Walsh to U.S. Trade Representative Katherine Tai to positions throughout the federal government. While much of the spade work has been already done, many of the policies still need to get across the finish line. We’ll be closely monitoring that progress.
The quality of jobs—and the policy support that makes that possible—is critically important. So is the overall size of our job market. And that very much depends on how competitive the United States is moving forward. We discovered painful truths during the pandemic: Too many goods we take for granted simply aren’t Made in America. From PPE to semiconductors, we faced (and in many cases continue to face) shortages and a lack of production capacity in the U.S. One thing we know for certain: That work won’t come back to America on its own. We must have the right incentives, through tax, trade, procurement, workforce, investment, and other policies, to create change, which I know is possible. Because we also discovered that with a singular purpose, a massive, guaranteed market, and a surge of public investment, something approaching a miracle is possible. Our workers are mass-producing the single most important public health product in a generation — the COVID-19 vaccines — and we are also making them for the world.
Finally, if we want a return to normalcy, it’s time for all of us to take public health and safety more seriously. As of this posting, at least 648,000 Americans have died from COVID-19. Our social, educational, vocational, and commercial lives and spaces have been completely upended. Ensure that you, your friends, family, neighbors, and coworkers are fully vaccinated when eligible. Let’s send COVID-19 into the dustbin of history, where it can join polio and smallpox. Other than buying an American-made product, it’s the very best thing you can do for our working men and women right now.