The United States steel industry, once the world leader, now produces less steel
ID: 1131813 • Letter: T
Question
The United States steel industry, once the world leader, now produces less steel than either China or Japan. American steel producers have come under threat from price-competitive suppliers in Brazil, Russia, and other emerging markets. For years, The U.S. steel industry dealt with this threat by running a lobbying campaign aimed at persuading the U.S. government to impose barriers on the import of foreign steel. The following are excerpts from advertisements used by the steel industry in this effort:
"During the past year, America lost more than 1.1 million manufacturing jobs... because domestic factories have shifted their operations to low-wage countries.
Manufacturing assures our national defense, our global leadership, and the living standards of more than 17 million workers.
(Other nations subsidize their domestic steel industries). Longer-term, subsidized imports will destroy a vital American industry and U.S. jobs.
In an uncertain and dangerous world, does America really want to becomedependent on Russia, Japan, China, Brazil and developing countries for something so basic as steel?"
Please answer questions below - one paragraph per question. Please support your answers with data. Make sure to use good quality sources to support your arguments. Do not forget to reference sources. Use rubric provided to guide your work.
Evaluate this statement. How valid is the argument?
What is the effect of such barriers on U.S. steel producers?
What is the effect of barriers on companies that use large amounts of steel in the manufacture of finished products?
What is the effect of barriers on consumers of products that are made with U.S. steel? With foreign steel?
What is the effect of free trade on producers and consumers?
Should the U.S. government be imposing trade barriers on the import of steel from abroad?
Explanation / Answer
1: Evaluate this statement. How valid is the argument?
Answer :
The U.S Steel Industry ws stronger than any other industry after the World War II. The demand for steel after the war was very high. More than half the world steel was manufactured by the U.S Steel mills in the late 1940's. This industry had declined in the last 60 years. This was mainly because foreign competitors started adopting more efficient technologies and the U.S were not ready to adapt to new changes from old ways of producing steel. Another reason for the decline of in the steel industry was that The U.S. started shifting towards the growth of Banking and other service oriented sectors with thus put the steel industry at its lowest.
2: What is the effect of such barriers on U.S. steel producers?
Answer :
Many steel producers were happy that barriers on exports were being imposed. They said that these measures will help to improve the domestic steel industries. Some economists felt that these tariffs will not help the U.S. producers mainly becase the sectors decline was due to improper innovation in the industry and not cause of imports. George W. Bush imposed tariffs upto 30% on steel imports in 2002. These tariffs cost the U.S. economy 200,00 jobs. Lyndon B Johnson, Richard M. Nixon and many others also imposed various tariffs, but these did not stop the decline in the steel industry. Hence, economists feel that barriers to imports might bacfire.
3: What is the effect of barriers on companies that use large amounts of steel in the manufacture of finished products?
Answer :
Economists say that tariffs on import of steel from foreign countries will raise the cost of steel.The rise in the cost will effect industries like construction sectors, aircraft manufacturers etc that use this metal. This will thus increase the price of the final product sold to the consumers. If these industries that produce the final product using steel decline, the jobs provided by this sector will also go low as these industries employ more people than industries that produce steel.
4: What is the effect of barriers on consumers of products that are made with U.S. steel? With foreign steel?
Answer :
Since there is a decrease in the production of steel in The U.S. along with tarriffs imposed on imports, there will be a rise in the price of steel because of the barriers imposed on import. The cost of manufacturing these products will thereby increase. This inturn will increase other costs like labour cost. Hence the final product will be sold at a much higher price than when it could have been sold at a comparitavely low price if ther were no tariffs imposed on import of foreign steel.
5: What is the effect of free trade on producers and consumers?
Answer:
No barries to trade is known as Free Trade. Here the countries do not impose any quotas, tariffs, duties etc.
Effect of Free Trade on Producers:
Many countries resist free trade in order to protect its own domestic industries. Competition from foreign industies may impose a threat on the domestic firms. Eg: If America is to have free trade with China, it will pose a threat as the wages of China's workers are low and hence their good are manufactured more cheaply than in America.
Effect of Free Trade on Consumers:
Consumers will have a wider range of choice if there is free trade. Many times outside goods have a much lower price than domestic goods. Many variety of products, different brands etc give the consumers a wider understanding of the foreign countries. Hence domestice companies have to work more harder in order to encourage the domestic consumers to choose domestic products over the foreign products.
6: Should the U.S. government be imposing trade barriers on the import of steel from abroad?
Answer :
The U.S. Government should lower the trade barriers on the import of steel from abroad as these barriers can effect global trade. Canada called these tariffs " Absolutely Unacceptable". China has reviewed to restrict imports of wheat adn soybeans from The U.S. due to the tariffs. These tariffs will have an adverse effect on U.S. economy if other countries decide to stop trade due to these barriers.
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