Thursday, February 23, 2017

AMERICAN FABRICATED STEEL

When I was young, you had to buy American on government contracts.  This was eventually done away with because you could save money by opening up contracts.  And "American" companies circumvented the rules by moving to more favorable tax locations, usually with just mock offices.  So there was a lot of lobbying pressure to do away with the rule.

On the Keystone XL and Dakota Access pipelines, however, you are talking about private companies doing the building and not financed by the American government.  So President Donald (The Bully) Trump's edict that they must use American fabricated steel seems to me to only have jaw boning effect.*

What if the Canadian government says that the companies must use Canadian fabricated steel?  Trump has already OKed the building of the pipelines,  Will he rescind the edict?  And what if the companies use 51% American fabricated steel and the rest Canadian steel?

Notice above I use the word "fabricated" because the ore might come from any iron ore producing country and not necessarily mined in the U.S.  But we always seem to focus on the last step.  "American made cars" use parts that come from all over the world but the fabrication is done here.  Human beings are strange people.  Even the steel may come from elsewhere in a bulk form and the fabrication is done here.  That makes it U.S. steel.

What if the steel is fabricated somewhere else by an American based company?  Does that qualify as American made?  I think probably so.  Thin of oil.  Exxon-Mobile produces oil all over the world, is that American produced oil because Exxon is registered in the U.S.?

Does the following answer any of the questions?

In a meeting with small business leaders, Trump clarified that he not only wants pipeline companies to purchase pipes fabricated in the United States, but also expects the pipe suppliers to use raw U.S. steel. 
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Trump also revealed how he would pressure pipeline companies to comply: by potentially refusing to exercise eminent domain, the government's ability to appropriate private land.
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"First of all, this is private investment, so there's no legal authority for the government to require a private company to use domestic materials," he [Dan Ikenson, director of the Cato Institute's Herbert A. Stiefel Center for Trade Policy Studies.] said on Thursday, prior to Trump's comments at the retreat.
"Is it good policy to have the president dictate where U.S. companies buy their inputs? No. I think that's terrible. I think that's dictatorial. I think it's very bad precedence."**
President Trump needs some counseling.  It turns out that half the pipe needed for the Keystone XL Pipeline is already made and the Dakota Access Pipeline is nearly completed and may enter usage as soon as April.***  Is Donald (The Bully) Trump going to demand that the pipe already manufactured be scraped. Is he going to demand that the pipe be rip up that is buried?

* http://www.cnbc.com/2017/01/26/trumps-plan-to-force-pipeline-makers-to-use-us-steel-is-dictatorial-and-a-bad-idea.html
** http://www.cnbc.com/2017/01/26/trumps-plan-to-force-pipeline-makers-to-use-us-steel-is-dictatorial-and-a-bad-idea.html
*** http://www.cnbc.com/2017/02/23/trump-keystone-dakota-access-pipeline-makers-must-buy-us-steel.html

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