international trade

Trump's tariffs will make Florence rebuilding up to 30% more costly

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Steering the ship of state right onto the reefs:

Homebuilders and contractors say the administration’s trade policy will add to the price increases that usually follow natural disasters. In addition to materials like lumber, steel and aluminum, the United States will impose tariffs on $200 billion in Chinese imports next week, including countertops, furniture and gypsum, a key ingredient in drywall. All told, some builders estimate that construction costs could be 20 to 30 percent higher than they would have been without these tariffs.

“We’re all going to pay the price for it in terms of higher construction costs,” said Alan Banks, president of the North Carolina Home Builders Association.

Of course Trump doesn't understand this, and neither do many of his supporters. Our town is going through a growth spurt, and I've had several NIMBY citizens ask me why we are in "such a rush" to approve new housing projects. When I tell them about the cost of building going up because of these tariffs, which will (probably) slow things down quite a bit in the near future, I usually get blank stares. One obviously Trump-supporting dude tried to make lemonade out of it by saying, "Good! My home will increase in value." When I asked him if he was thinking about selling, he said, "No! I love my house!" When I broke the news the only thing he would get out of the deal was higher property taxes, he wandered off with a vacant look on his face. Bless his little MAGA heart. And the tariff punishments just keep on coming:

Manufacturing vs. installation: A hard look at the economics of Solar energy in the U.S.

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I recently took a brief tour of a NC Solar farm under construction, and got into a conversation with one of the supervisors about Trump's 30% tariffs on imported Solar panels. I was not surprised when he spoke favorably about the resulting increase in manufacturing jobs here in the U.S. as a result of said tariffs, because it is a very common misconception by those who support renewable energy. If you raised your eyebrows at that, you definitely need to continue reading. But before I get into the explanation, here's an article from 2009 to chew on:

Wacker Chemie AG will build a $1 billion plant in southeastern Tennessee that is estimated to create 500 green collar jobs in the region to manufacture hyperpure polycrystalline silicon, primary material used in the manufacture of solar panels...With the right policies and leadership from the government this sector is poised to take off and experience a long period of very rapid growth, becoming an important contributor to our nation’s electric energy mix and providing many tens of thousands of green collar jobs across the country.

Sounds promising, doesn't it? Unfortunately, it's a heck of a lot more complicated than it sounds. Follow me below the fold to find out why.

Donald Trump is putting North Carolina out of business

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Still waiting for all the "winning" to happen:

The U.S. Chamber of Commerce says $1.1 billion in North Carolina exports are threatened by a trade war, including a half-billion dollars worth of exports to Canada and $350 million to China.

Tariffs are impacting not only businesses, builders and growers but consumers who will see higher prices for things like appliances, cars and houses. Multimillion-dollar projects are in danger of being postponed or canceled.

I've never been a fan of "completely" free trade. The truth is, there are over a billion unemployed or seriously under-employed people worldwide, and American workers could easily be swallowed up and replaced in that formula. But you have to approach trade policy like a surgeon, carefully cutting and stitching, and not blasting it with a sawed-off shotgun like Trump is doing. The ripple effect of unintended consequences can be devastating to businesses:

Tariffs on Canadian lumber exacerbate affordable housing crisis

Unnecessary costs like this add up quickly:

The Outer Banks Homebuilders Association is urging its members to contact members of Congress to urge repeal of the Trump Administration’s tariffs on Canadian soft lumber imports. Rising lumber prices have already increased the average price of a single-family home by $6,388 since January of last year, according to the OBHBA and the National Association of Homebuilders. Some of the increases are due to tariffs of more than 20 percent on Canadian softwood lumber shipments into the U.S.

The NAHB points out that U.S. domestic production of softwood lumber is insufficient to meet the demand for construction of houses. According to the NAHB, in 2016, the U.S. consumed 47.1 billion board feet of softwood lumber but domestic producers were only able to supply 32.8 billion, creating a shortfall of over 14 billion.

As with many (even moderately) complex issues, Trump is simply not intelligent enough to grasp the ramifications of his actions. If these tariffs are not removed, there will be a push, probably successfully, to relax U.S. regulations on domestic timber culling. Here in the Southeast, we're already seeing the scourge of the wood pellet industry. Is Europe placing tariffs on that? Oh no, they want us to clear-cut our forests so they won't have to touch theirs. Slapping a tariff on Canadian lumber makes absolutely no sense, no matter which way you look at it.

Trump's steel tariffs undermine his "gleaming" infrastructure program

Kind of sheds some light on all those bankruptcies:

The proposed steel and aluminum tariffs President Trump announced last week made domestic steel and aluminum mills very happy. But the potential shift in metal prices has many industries, including construction, expecting higher costs, and may also impact infrastructure spending across the nation.

In a study released yesterday, the D.C.-based Trade Partnership, an economic consulting group, projected that 28,000 jobs would be lost in the construction industry alone due to the tariffs.

Keep in mind, Trump's grandiose infrastructure plan relies heavily on state and local dollars, with the Federal government only pitching in 20% for these projects. Jacking up the cost of steel by 30% pretty much takes bridges completely out of the formula, since they were already too pricey to replace under normal annual budgets. But the same goes to a lesser extent for a lot of other infrastructure projects, like buildings and utility upgrades. You can definitely file this tariff idea under the "hideously false economies" category:

China owes NC companies millions in trade duties

But don't hold your breath:

Stanley Furniture Company, a High Point-based manufacturer, is owed more than $71 million and Hickory-based Century Furniture is due more than $5.3 million in uncollected duties assessed against overseas furniture manufacturers who “dump” products into the U.S. market at artificially low prices. The figures are based on estimates of past payouts of collected duties.

Take it from somebody who watched his industry crumble, due in a large part to Chinese non-compliance with royalty requirements: It doesn't matter what laws we pass or fines we levy, the Chinese will simply refuse to pay and continue to undercut US manufacturers and producers. How can they continue to get away with it? Because powerful US importers and retailers are profiting from the scam:

Open Letter to President Obama on the Trans-Pacific Partnership

Dear Mr. President:

Please either terminate U.S. involvement in the negotiations for the Trans-Pacific Partnership or, at the very least, tell Michael Froman to thoroughly renegotiate the TPP’s current chapter on investment, especially the sections on investor-state dispute settlements. As the New York Times shows in its recent article “Trans-Pacific Partnership Seen as Door for Foreign Suits Against U.S.” the TPP in its current form would let corporations “sue” governments to obtain TAXPAYER COMPENSATION for losses of “expected future profits.”

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