Donald Trump

How Trade Tariffs Screw Over the Little Guy (Aluminum Foil Edition)

Donald Trump's protectionist tariffs against Chinese aluminum will double the price of a very widely used product: aluminum foil.

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Donald Trump, Twitter, Reason

Donald Trump ran for president as a protectionist and is ruling like one. From former Reason Editor Virginia Postrel comes news of a massive hike on aluminum from China:

The Commerce Department has said it will impose preliminary duties of 97 percent to 162 percent on the Chinese imports that supply much of the U.S. market with thin aluminum foil. That's likely to have much more far-reaching effects on U.S. companies than the minor deals President Donald Trump announced on his trip to China.

Aluminum-foil buyers, many of them swing-state manufacturers, are reeling at the size of the duties, which would at least double the price of Chinese foil.

Think about how much stuff you buy uses aluminum foil. Actually, just read the partial list Postrel has created:

Aluminum foil wraps burritos, physics equipment and the highlighted tresses of hair-salon customers. It forms flexible ducts and lasagna pans, lines cigarette packs and fast-food sandwich wrappers. It hides between layers of film in flexible packaging. It protects aspirin bottles from tampering, petri dishes from light and tractor engines from overheating. It tops yogurt cups and peanut cans. It backs blister packs of antihistamines, antacids and birth-control pills. It goes into automotive parts and air-conditioning systems.

U.S. manufacturers rely on aluminum foil. So do nail salons, building contractors and bakeries.

In her Bloomberg column, Postrel talks to people in the foil industry. They are already looking for new suppliers since Chinese foil, which is state of the art and high-quality, is being artificially priced out of the U.S. market. America doesn't make that much foil because it's cheaper and more efficient to buy from, well, poorer countries; just two companies have mills in America that are making the stuff targeted by the tariffs. So this isn't going to Make America Great Again, it's just going to force U.S. customers to find new, more-expensive supplies. The countries whose manufacturers will win include Taiwan, South Korea, Bulgaria, and…Russia. Another possibility: Foil middlemen in Canada and Mexico might import Chinese product and, assuming NAFTA isn't ditched, send the product to the United States at some sort of mark-up.

For the want of cheap aluminum foil, your burrito was not lost exactly, but made more expensive for no good goddamn reason. Other than political pull and the economically illiterate policy decisions of President Donald Trump. Postrel concludes by talking to a foil broker who voted for Trump but is shaking his head of late:

"I think people hear, 'Make America Great,' and they think bringing jobs back to America. What jobs is this going to bring back?… It's going to improve the [domestic] aluminum manufacturers' bottom line. It's not going to improve it because they got better, or they got more efficient, or they figured out a better way to do it. It's going to be because they've been able to raise their price and fill their mills, because people don't have choices anymore."

Read the whole thing here. And without going full Johnny-Carson-with-toilet-paper on you, start thinking about hoarding aluminum foil or switching to wax paper.

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  1. Tariffs are always bad from a libertarian, and economic, perspective. And they are never glamorous.

    1. So is government-subsidized dumping.

      1. “So is government-subsidized dumping.”

        It’s bad when a foreign government makes something cheaper for us to buy?
        Sarc or stupidity; you decide.

      2. Idiot. When a government subsidizes something for export, that means their taxpayers are footing the bill to make something cheaper for me.

        How in the hell is that bad for me?

        Oh, you say, it drives our manufacturers out of business!

        No it doesn’t. There was an economics article soemwhere else a while back n the issue of dumping and of monopolies driving competitors out of business by lowering prices below production costs. Everyone has this vision of Big Corp driving little companies out of business this way, then raising their prices afterwards to make up the loss. Only it doesn’t and can’t happen that way.

        1. Suppose Big Corp’s cost of production is $100 for a $200 item. Along comes some upstart competitor who can make it at $75 and sell it for $150. Remember, this never happens when Small Corp’s production costs are higher than Big Corp’s. Big Corp drops their price to $125 to drive them out of business. But what really happens is that Big Corp is losing $75 for every item sold, while Small Corp is only losing $25. And to put it another way, Big Corp is only making $25 above production costs, while Small Corp is making $50 above production costs.

          Suppose Small Corp decides even that’s too much and goes bankrupt. Now all their previous production hist the shops ar fire sale prices, and Big Corp loses even more business. Plus, other competitors may spring up with more backbone. These small competitors can survive on $50 over costs far longer than Big Corp can survive on only $25 over costs, plus they may find ways to produce the same thing even cheaper, especially if they buy up Small Corp’s production machinery at bankruptcy auction.

          Suppose Big Corp does actually scare off competitors. Now they have to raise their prices to make up what they lost. They lost $75 per unit, they have to raise the price $75 to make it up, to $275. This will only encourage new startups to produce for $75 and charge “only” $250 and make $175 of profit.

          Monopolies only happen for new inventions or government cronyism.

  2. Aluminum foil wraps burritos … and birth-control pills.

    It always comes back to immigrants and women’s health with the Republicans, doesn’t it?

    1. My burritos are pure ‘Murican!

      Make Burritos Great Again!

  3. Donald Trump’s protectionist tariffs against Chinese aluminum will double the price of a very widely used product: aluminum foil.

    The headline says that. After reading a bit, the claim is specious, and later qualified with

    Aluminum-foil buyers, many of them swing-state manufacturers, are reeling at the size of the duties, which would at least double the price of Chinese foil.

    I’m not trying to pick nits, I just would like the headline to match the body.

  4. If the story isn’t about groping women or dating teenagers, nobody cares.

  5. If not tariffs, how do you fight dumping, which can be considered a calculated economic act to drive out competitors and corner a market?

    After my family’s restaurant was sold I made sure to grab the last two commercial-sized rolls of aluminum foil. I probably have enough foil to last 15 years.

    1. albo|11.16.17 @ 3:06PM|#
      “If not tariffs, how do you fight dumping,

      You don’t.
      What an idiot.

    2. Sorry, I left this imbecilic statement out:

      “…which can be considered a calculated economic act to drive out competitors and corner a market?”

      Let us know when that happens.

  6. start thinking about hoarding aluminum foil or switching to wax paper.

    Wax hats aren’t as effective in stopping mind control waves as tin foil hats are. Or maybe THEY are making me tell you that.

    1. Parchment paper. One of the best inventions ever.

      1. Yes!

        Best use: take cheese out of its plastic wrapping, loosely wrap with parchment paper and put in a Ziploc with the useful parts of the label.

  7. Aluminum foil is a big part of my life.

    Yours, too?

  8. Finally my platinum foil business might become competitive!

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