I'm sure this guy will just get a little slap on the wrist.
>In Mexico, Mr. Shen was implementing an audacious plan, according to people familiar with the matter: A network of trading companies could route hundreds of thousands of tons of aluminum from China to Mexico, where a plant would melt it for shipment to the U.S., evading trade restrictions and claiming North American Free Trade Agreement benefits.
It's in the US's interests that they don't allow another country to manipulate the market to destroy the US production capacity. Once that capacity is online the foreign country can then raise prices.
It's not easy or cheap to bring production capacity online.
Generally I'm pro-free trade, but the issue gets quite messy when you consider government subsidies. As a Canadian, this discussion comes up frequently along the lines of the subsidized agriculture sector.
It says in the article: American companies are being put out of business by heavily-subsidized Chinese companies.
> Trying to enforce a tariff on element production from a subset of external countries seems sisyphean.
Apparently not:
> The company failed to obtain NAFTA benefits after U.S. authorities concluded that the metal came from China.
It helps to read the article you're commenting on ;)
I loved fantasy books as well.
He's, simply, laundering Chinese aluminum through Mexico.
> Meanwhile, setbacks were piling up. Trucks and metal were stolen from the Mexico facility, slowing deliveries, former Aluminicaste employees say. The company failed to obtain Nafta benefits after U.S. authorities concluded that the metal came from China.
So, that's what China was doing - they were giving this aluminum company tons of money, and it allowed them to produce and sell aluminum for far cheaper than should be possible. So America put a tariff on importing that aluminum from China.
Instead, they sent it to Mexico, and then pretended that the aluminum came there when shipping it into America. No more tariffs!
> the companies were selling products below the cost of manufacture and that the Chinese companies were benefiting from unfair subsidies from their government.
I assume Foxconn does not get subsidies to sell iPhones below cost :)
I'm in Argentina at the moment and I'm constantly hearing local businesses accusing china of dumping because they can't produce more cheaply, but than everywhere else in the world we buy Huawei, Xiaomi, etc I feel that accusations of dumping are more political interpretations than measurable facts.
Because unless dumping actually succeeds at that goal, and I don't see any evidence that it does, it seems indistinguishable to American consumers from a huge technical advance in a foreign country lowering the cost of some import--yes, it may be detrimental to domestic producers, but it's a huge benefit to domestic consumers and a net benefit overall.
And in the above scenario, Boeing is also someone that could buy those cheap Airbus planes. I know, it's a contrived scenario, but I think it illustrates the point.
In the case of aluminium being subsidized by the Chinese government, same thing. The entire world, including America, get's to benefit from cheap Aluminium. You could argue it's a relatively direct subsidy by the Chinese government to all Aluminium consumers. The Chinese government, and their subsidized aluminium producers will not be getting that money back. And really, all they're essentially buying is a temporary halt on competition. As soon as they monopolize the market, and attempt to abuse it, competitors will start appearing and they're back to square one. With a large capital deficit and negligible profits from the exercise.
Alternatively, you get protectionism via tariffs. One could argue that that is a form of punishment on all the consumers of the tariff-ed good, or consumers of goods that are made from the tariff-ed material. The consumers pay more, and the government get's extra tax revenue. Does it buffer, and protect local industries from turbulent and cheap foreign markets? Sure, but that's at the cost of the consumers again. Really, the only winner is the state's coffer.
</opinionated rant>
Let's say Chinese aluminum makers control the market and puts all other aluminum ventures out of business, and then raises the price until they don't need a subsidy and make a healthy profit.
Ok, so now someone else can jump in the aluminum game. Why would they do that if they knew that China could immediately put them out of business by turning the subsidy back on. Who would invest their money in that venture?
Why do we want to protect primary industries when historically there's been so much more money in secondary industries?