…Dumping Is Bad…
Considerable media attention has been given to tariffs, and the dumping of steel at below cost.
The Wall Street Journal (WSJ) published the accompanying chart showing steel production and steel imports by country.
In its article, the WSJ focused on the righthand chart, pointing out that only 2.2% of US steel was imported from China.
There was widespread media condemnation of the administration for imposing tariffs on steel imports. The media uniformly said that tariffs would harm our friends and do nothing to deter China from dumping steel onto world markets.
But the lefthand chart tells an important story about China’s dumping steel onto world markets.
The implications of the lefthand chart were universally ignored by the media.
The countries that bought China’s low-cost “dumped” steel used it to produce products such as cars, farm equipment, and appliances.
When those products are sold in the United States, China’s low-cost “dumped” steel is imported into the United States as part of the car, tractor or appliance, or other smaller product, such as leaf blowers.
A car could have 2,000 pounds of steel; a tractor could have 1,000 pounds of steel; and so on.
Every pound of Chinese steel that’s indirectly imported into the US is a pound of steel that US steelmakers didn’t produce.
Whether steel is dumped directly or indirectly into the United States, it harms the US steel industry.
While there is some question whether US tariffs on Chinese steel will have any effect on China’s dumping its steel at below cost, it highlights the dangers of dumping.
Dumping is bad.
Dumping at below full cost, by anyone, is unfair and ultimately bad for our economy.
But, we are dumping electricity at below full cost into our market, and few people have raised any objections.
In fact, there is considerable support, including by federal agencies such as FERC, for what some of the Independent System Operators (ISOs) are doing when they hold auctions for the production of electricity based on marginal costs, i.e., below full cost. See, The Market for Electricity is Rigged.
Electricity produced by wind and solar is being dumped at below full cost onto the grid by these auctions and forcing nuclear power plants and other producers to close.
. . .