Supply Chains

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Logistics and supply chains are not necessarily the same thing. The former is known as a military science of procuring rations for troops. Supply chains, which pertain to sourcing and assembly of products, are currently topical in light of international relations.

Assistant to President Trump, and his Director of the Office of Trade Policy, Peter Navarro, can be intriguing. Navarro has written books, to the consternation of mainstream economists, such as Death by China: Confronting the Dragon – A Global Call to Action. His writings are among reasons for selection to his post, with consideration of his pro-tariff positions.

Protectionism and retaliation, pertaining to the motorcycle industry, have gained cursory treatment at this blog already. There has not been discussion specifically about steel, though metals are input into motorcycle manufacturing. One of the persistent issues is capacity, or roughly, the quantity that could be created if all firms actively produced it at once.

Part of economic growth observed in the People’s Republic of China is attributable to its steel-making. The material is used in construction of gigantic projects that no one lives in–sometimes referred to as ghost cities–as well as vibrant ports and other public works.  The steel industry serves as an important source of employment in China, even when the quantity produced exceeded domestic demand, resulting in a surplus.
Chenggong, China

Supporting an important but struggling industry can differ from financing the export of its products. China scrapped some subsidies of its metal exports during 2016. However, the dumping issue resulted in tariffs on Asian steel, enacted in both Europe and the US, that same year.

Then, in 2018, with the help of Secretary of Commerce, Wilbur Ross, the Trump Administration imposed other taxes on foreign metal, citing national security.  It was a controversial matter, particularly among left-leaning journalists. Nations such as Australia and Argentina were excluded pursuant to an agreement to limit volumes. Navarro made appearances, repeatedly presented his perspective, and distinguished between tariffs and quotas in the clip below.  


He referenced a new aluminum rolling mill in Ashland, KY with jobs that pay above the region’s rates, citing “a huge overhang of overcapacity by China…” Navarro further clarified that the administration could not “Come to an agreement with Mexico, Canada, and Europe,” then. He added that “…We are going to have fair and reciprocal trade…” In response to a question about if the price of metals would go up, he replied, “There’ll be plenty of steel and aluminum around, it’ll just be made by American hands.”

There may be a disquisition on further action, beyond metals.

Missouri Senator Josh Hawley recently commented on how dependent our supply chains are on China. He said it hasn’t been good for America. Hawley also stated that, “We’ve lost jobs, its been terrible for working families, and now it is terrible for the whole country when we are facing potential shortalls in antibiotics. Why? It’s because of the reign of China.”

He has proposed legislation, the Medical Supply Chain Security Act. It could require onshoring of medical devices and pharmaceuticals. The bill’s supporters include Democratic Representative Mark Pocan.

There is currently a national emergency because of the Covid-19 viral outbreak. Provision and availability of medical supplies are vitally important. The onshoring matter might be delayed through the 2020 election, largely affected by the president’s thinking.

During the interim, Navarro is bringing an executive order to President Trump, with the objective of cutting dependence on medicine made abroad.



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