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I'm sure this guy will just get a little slap on the wrist.
by davesque 10y ago
I'm sure this guy will just get a little slap on the wrist.
- JoeAltmaier 10y agoIts not clear he's done anything wrong. Shipping Aluminum to Mexico? What's the problem.
- CountSessine 10y agoThat's what I was thinking. If China wants to subsidize American manufacturing by selling us cheap aluminum, what's the problem? This is is bad if you're part of the tiny American aluminum mining and extraction business, but it's probably pretty fantastic if you're part of the huge and important industries making anything with aluminum, like cars and airplanes. Why do we want to protect primary industries when historically there's been so much more money in secondary industries?
- ittekimasu 10y agoDo you know the story of how the British went from petty traders to "greatness"?
- lostlogin 10y agoAnd then back again. That's empires for you.
- CPLX 10y agoOf course, one could argue that those of us in the US are in fact the British Empire, the narrative slightly complicated by that civil war period of 1776-1812 of course.
- ittekimasu 10y agoTrue, this seems to be how Foreign policy people view things. This viewpoint shows up in things like "Five eyes" etc.
- bitchypat 10y agoIt is posited that in fact it is clear - in the article no less! >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.
- loeg 10y agoAnd why is that a problem, exactly? In the end aluminum is fungible for aluminum, and the US is getting aluminum from Mexico under NAFTA. Trying to enforce a tariff on element production from a subset of external countries seems sisyphean.
- brohoolio 10y agoIf China is greatly subsidizing the aluminum production then then how will US producers compete? 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.
- riphay 10y agoIt could be well within the Chinese government agenda to have broader control over global productive capacity. Impossible to prove, I know. 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.
- patrickburke 10y agothe doc death by china covers some of these issues... not free trade by a long shot, more like an ongoing trade war
- 10y ago
- oh_sigh 10y agoThe simple version: If a foreign government is unfairly subsidizing an industry, America will slap a tariff on it. This is good policy - imagine, for example, if Airbus could afford to sell their planes for $1, because they are being entirely subsidized by the French government. Everyone buys airbus, no one buys Boeing any more. Boeing(along with tens of thousands of jobs) goes bye bye, and now Airbus starts selling their planes for whatever they want, because there is no competition left. 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!
- ktRolster 10y agoNote that this trick is very hard to pull off in the long-term. China tried it with rare-earth metals, and production just started up elsewhere. In the short term it's annoying and causes disruptions.
- Justin_K 10y agoIt isn't very hard to pull off dumping, it's game that's been played for centuries. That's why all modern governments disallow it. China especially does it all the time, here's an example with solar: http://www.nytimes.com/2014/12/17/business/energy-environment/-us-imposes-steep-tariffs-on-chinese-solar-panels.html http://www.nytimes.com/2014/12/17/business/energy-environmen... .
- 627467 10y agoA genuine question: why is this dumping, but importing any other electronics (say any modern computer, cellphone, appliances) not so?
- ramchip 10y agoAs the article mentions: > 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 :)
- DonHopkins 10y agoThey're going to build ladders with it!
- cpeterso 10y agoOr they're going to build Trump's wall.
- microcolonel 10y agoThat was literally the first thought that came to my mind.
- aab0 10y agoSounds like he's already been hit where it hurts. If his fortune is ~$3b and the stockpile is ~$6b, then he's losing a ton of money every day to interest and opportunity cost and shipping it back to Vietnam and however much the price has fallen since he bought it all, which could be a large fraction. Given how his partners have the knives out for him, he may not even have that $3b. One can stockpile, but as always, how does one bury the body?
- liztsai 10y agoHeh, well, depends on whether or not the material was hedged in and how much flat price risk he took. He may very well have caught the market at a good time and storage/carry costs in Mexico should be low.