President Biden accuses China, Germany, and Canada of dumping steel used to package canned goods. The result will be higher prices for everything canned including soup, sauces, and vegetables.
New Tariffs on Food-Can Metal From China, Germany and Canada
Please expect the price of all canned goods to rise due to New Tariffs on Food-Can Metal From China, Germany and Canada.
The Biden administration on Thursday announced new tariffs on can-making metal imported from China, Germany and Canada, a move that food companies say could lead to higher prices for some canned foods.
Chinese products would be subject to the highest tariffs of the three countries—a levy of 122.52% of their import value. That rate partly reflects Chinese companies’ refusal to cooperate with the investigation to prove their independence from the Chinese Communist Party, an administration official said.
The Consumer Brands Association, a trade group representing companies such as Campbell Soup and Fresh Del Monte Produce, estimated new tariffs, if applied aggressively, could raise the prices of canned food by up to 30%.
Assume for a minute that China, Germany, and Canada are dumping soup cans in the US.
What’s the Correct Response?
- Complain
- Increase tariffs
- Cheer
The answer, of course, is number three. If China, Germany, and Canada are indeed dumping steel bellow cost, then the nations are giving US consumers a break at their expense.
Moreover, I assure you, not a single job will return to the US as a result. US steel corporations are not about to go on a hiring spree to produce more soup cans. The only thing that will happen is the cost of all canned goods will rise.
Solar Panels
The same applies to solar panels, but even more so. Solar panels are one aspect of clean energy that makes sense at the right price. But the US has stiff tariffs making sure the price is not right. Instead of doing something for the environment, solar panels are just to expensive.
If instead we allowed cheap panels from wherever, we would create thousands of jobs installing them, trucking them, wiring homes for them, and putting in the needed battery systems.
All of that economic activity does not take place because of US tariffs. Some companies learned way to way to skirt the tariffs, but Biden is after them too.
US Slaps New tariffs on Solar Panel Companies
Please consider US Slaps Tariffs on Solar Panel Companies Dodging China Duties.
The United States on Friday will finalize a decision to impose import duties on solar panel makers who finished their products in Southeast Asian nations to avoid tariffs on Chinese-made goods, according to a senior Commerce Department official.
The Commerce probe found that units of Chinese companies BYD, Trina Solar, Longi Green Energy and Canadian Solar were dodging US tariffs on Chinese solar cells and panels by conducting minor processing to finish their products in Cambodia, Malaysia, Thailand and Vietnam before shipping them to the US market.
Other companies operating in those nations have the ability to pursue a certification process to show that they are not circumventing tariffs. To become certified, solar cells and panels must contain non-Chinese wafers and three other key components.
Unintended Consequences
NPR confirms my take on solar panel use.
The Commerce Department’s investigation began in March 2022 in response to a complaint from a small U.S. manufacturer, Auxin Solar. It has been a major source of friction inside President Biden’s administration.
The department’s inquiry contributed to a major drop in solar installation forecasts, according to the Solar Energy Industries Association, as installers worried that their projects would become cost-prohibitive if the government imposed retroactive taxes or if the cost of future purchases increased.
“Worst-case scenario, you can think about retroactive tariffs of up to 240%,” Leo Azevedo, a solar procurement manager, told NPR in May 2022. “There’s just too much risk to order panels right now and that’s just the end of it.”
“The U.S. Department of Commerce is out of step with the administration’s clean energy goals, and we fundamentally disagree with their decision,” said Abigail Ross Hopper, head of the Solar Energy Industries Association. “It will take at least three to five years to ramp up domestic solar manufacturing capacity and the global supply chain will be vital in the short-term.”
Auxin Solar
This solar panel mess all started with Auxin Solar. Please consider A look at the mysterious company causing a big trade mess.
Auxin Solar, the tiny company whose trade petition is rattling the whole U.S. solar industry, produces solar panels of questionable quality in volumes that appear to be lower than claimed, sources tell Canary Media.
I have spoken with a solar installer who has used Auxin panels, examined data on deployment of those panels in key U.S. markets, and again visited the site of Auxin’s sole factory, camera in hand. Here’s what I’ve learned about this little company that’s causing a big ruckus.
Northern California solar installer Barry Cinnamon of Cinnamon Energy Systems was previously an Auxin customer — but not a happy one.
“They were our [original equipment] manufacturer at one point. Their quality was terrible,” he told Canary Media. There were “many module failures from their own manufacturing, and we were unable to get any warranty service. Broken glass, half output of panels, burn marks on the back. They sourced almost all of their components from overseas, some likely from China.”
As we’ve said before, import tariffs are a blunt instrument and have a track record littered with unintended consequences. Trump-era tariffs on Chinese modules (which the Biden administration opted to extend) have contributed to the U.S. having some of the world’s highest utility-scale solar costs, and there’s little evidence that the tariffs have “leveled the playing field” in any meaningful way or spurred domestic panel production.
Bottom Line is More Inflation
Not only does Biden demand more clean energy, he also demands consumers pay the maximum amount for it, despite that being counterproductive to the main goal.
Yesterday I commented Yet Another Biden Regulation Will Increase Costs and Promote More Inflation
My post yesterday involved a new Biden regulation that will increase the price of all government projects. Click on the link for details.
Today we can add solar panels and soup to the list.
since the soda co got away with doubling soda prices after aluminum prices got tariff, which came out about 1cents a can of coke, but coke co took it as a way to break the cola wars and increase profits . as for Campbells soup i doubt steel can costs much . a tariff certainly will not come to 30+cents since most Campbells sell for over 1 dollar a can. solar has benefited china ever since they passed tax credits, silicone solar cells are mostly made in china and even quote USA made use china silicone cells same with lithium, copper and electronics all majority made in china. and on top of this china uses and continues to build coal power plants. i suspect tariffs will benefit the treasury . this and UN loves putting cat in frount of horse . get problems ready first before you shut down something not enough power shut coal, nat gas then push ev at the same time and wonder why ev are not viable for millions because you cannot have one as your only car as well as being wealthy to afford one
During the tariff war, Trump subsidized the agricultural industry with $50B to keep American consumer prices down. Look for Biden to do the same with steel using the blank check Infrastructure Bill.
If you give China a global monopoly on something important, for instance in PV polysilicon wafers, that could become a problem being that it is an autocratic regime. In fact you should worry about giving a county like Norway that power.
NEWS FLASH:
The Biden administration will be announcing “Honesty as Policy.”
They will be eliminating tariffs and directly taxing Americans that buy foreign goods in order to punish these foreign companies. (In your dreams.)
The Administration does have strange logic.
“No soup for you!”
A long term problem of other countries “dumping” long term results in decrease of domestic production. The downside which we felt keenly in the pandemic.
Consider rare earth metals which China controls and threatens withholding if unless the target country caves.
Something to consider when listing options of ways to respond.
Balancing the needs of efficient and safe production, goverment regulations to protect wages, and the environment… Seems to result in necessary but difficult decisions.
Fortunately, I have the means to maintain a garden and create my own soup. More healthier than those cans of sodium water.
To be effectively competitive in foreign markets, requires that we sell lower unit costs and higher quality products. This means concentrating on production, innovation, and product quality. It means giving workers a financial stake in increased productivity (share in profits, etc.).
I remember when soup wasn’t something out of can, but the GDP was lower in those days. Al Capone served soup out of a pot to the poor while wearing a nice suit.
Typical Biden Inc. policy blunder. This Administration and Old Joe specifically, make’s decisions for policy like a child wanting ice cream for desert (hmm… parallel?).
No child you will get a belly ache if you eat dessert too soon after dinner.
No Mr. President, you will cause a huge spike in Inflation if you raise tariffs on less expensive goods to the U.S.
Child 2 hours later: I have a belly ache. I think the ice cream was bad, or had too much milk in it. I shouldn’t get sick eating something that taste so good.
Biden 2 months later: The U.S. has to raise rates again. Inflation has spiked because of Trump. Steel cost are through the roof, and Our Unions are demanding more pay as a result. Damn Labor Unions, Low Cost Materials and Low Cost Labor are making Americans Pay More.
How is My IRA Program going by the way. Has it knocked Inflation down to 2% yet? If Not then “Make It” look like it did. The Useful Idiots will Cheer for Our Administration and We will crush Trump, or put him in jail, whatever we need to do, based on how things play out.
I’m hungry! Get one of my boys to run and get me some ice cream, will ya! They gotta earn there living some how…
Toot toot!
Umm Steel Mills ARE hiring, LMAO
link to indeed.com
Campbell’s just bought Sovos Brands so expect the quality of Rao’s sauces, Michael Angelo’s frozen entrees, as well as Noosa yogurt prices to increase or the quality to drop in order to increase profits.
My vote would be for a drop in quality.
It’s almost invisible.
canned food is poison. smells like a favor they are doing. maybe our fat and sick population will get healthier. the premise of dumping is silly. i’ve heard that same BS since the 70s. it’s poppycock. donald rump’s trade war was so dumb. and biden doubled down. two dumbs don’t make a right.
China and Germany are doing US consumers a favor.
Aluminium and tin cause Alzheimer plucks in the brain. The center aisles are loaded
with salt, sugar, chemicals, preservatives and dehydrated junk.
Make your Kartoffelsuppe yourself in a steel pot.
I will copy my reply from earlier:
I wouldn’t worry about the steel or the tin. The bigger worry are the chemical coatings that are used on the inner part of the can, particularly BPA. Supposedly BPA is fairly toxic, and can leach into some of the can contents. Can manufacturers are trying other coatings but no one knows how safe those are either.
There are plenty of studies, but no definitive answers on how bad these coatings are. So if you want to reduce your risk, buy fewer canned foods.
And if you can come up with a better and cheaper food container, it might make you very wealthy.
Instead of imposing tariffs, Biden can make US steel competitive lowering energy costs, mad regulations and taxes.
He lowered energy costs last year by dipping into the Strategic Petroleum Reserve, flooding the market and dropping oil prices from $120 to $65. Those releases are over and the Saudis are restricting supply now to get the price of oil back up towards $90. Biden is trying to jawbone the Saudi’s into boosting production, but they need higher prices to help fund their mega projects and are not very interested in helping America.
So Biden is now turning a blind eye towards sanctioned Iranian and Venezuelan oil, hoping they can boost exports and help soften prices. And they have, but its still not enough to offset the Saudi and OPEC cuts.
It will be interesting to see how high the Saudi’s can push oil prices going into 2024 and at what price point they will finally start to bring some supply back onto the market. Most pundits seem to think the Saudi’s want $90 to $100. But some are thinking that they may accidentally squeeze the supply too much and cause another spike in prices next year. Only time will tell. And there is very little Biden can do about it.
Got oil?
Biden selling the oil reserves helped the Chinese steel industry more than the US steel industry. The only oil in the steel industry is the trucking/shipping costs and cheaper oil reduces the freight cost of getting the steel from China to the US.
Now restrictions on coal mining and anything that raises the cost of electricity can add to the costs of blast furnaces and electric arc furnaces.
And yes I agree that oil will get pricy next year. Got oil? Better yet invest in oil majors.
Agree. SPR release wasn’t about steel. It was mostly about gasoline prices and the votes you lose when they go up.
Of all sectors in the stock market, oil has the lowest PE, and highest cash flow. Still one of the best investment values out there. And its only going to get better as oil prices rise.
Papa, I am tired of this.
It is time that you formed a Master Limited Partnership with you oil investments and made even more money from all of us here that desperately want to invest in the PapaDave, MLP for fun and profit and tax advantages.
I may be out tens of dollars on soup this year.
You win the soup crisis comments section.
Mish, shouldn’t those soup cans be certified too?
To make sure the tin cans are not communist party influenced?
Of course, the German and Canadian cans ought to be certifiably non-racist.
And the minerals & energy used must also be certified to be ideologically pure, and not the result of poor climate policies or tainted by poor environmental and child labor regulations?
So we need about 5 unique QR codes stamped into each can to prove certification in conformity with our lofty purity concerns.
I recommend calling them “freedom” cans, or “upright” tins;
perhaps “flashers” will catch on because they signal so much virtue!
There’s steel in soup cans?
Tin coated steel. Which is why they are often called “tin cans”.
Seems unhealthy. There are some soups sold in what appears to be wax coated paper canisters. They are already cheaper than canned. I guess the benefit of cans is shelf life, otherwise no reason to buy them other than the marketing campaigns tricking you.
I wouldn’t worry about the steel or the tin. The bigger worry are the chemical coatings that are used on the inner part of the can, particularly BPA. Supposedly BPA is fairly toxic, and can leach into some of the can contents. Can manufacturers are trying other coatings but no one knows how safe those are either.
There are plenty of studies, but no definitive answers on how bad these coatings are. So if you want to reduce your risk, buy fewer canned foods.
And if you can come up with a better and cheaper food container, it might make you very wealthy.
What is that, a few cents worth of steel?
No way are can prices driving soup prices. If the cans were that expensive to make we’d be using reusable ones of some kind or plastic.
I not much for protectionism but having a functioning steel industry that hasn’t been driven out of business by foreign dumping seems like probably a good thing.
What do you mean by foreign dumping?
Do you think Germany is exporting soup cans at tax payer cost?
If you want a steel industry for strategic purposes (and iron ore?), wouldn’t it be better to finance it directly, a line item in the strategic readiness budget, rather than have pensioners pay for it by taxing their soup?
Germany is trying to destroy the American soup industry like the Chinese destroyed our textile industry. They want to force us to eat Kartoffelsuppe, Leberknodel Suppe and even Sauerkrautsuppe since they aren’t competitive in cars anymore. It’s their plan and the German Klaus Schwab is at the head of it. We must raise tariffs on German soups!
As I said above:
A typical soup can has 2.6 cents of steel. I remember Wilbur Ross saying that Trump’s tariffs on steel would add 0.6 cents to the cost of a can.
I don’t know if that tariff is still in effect and if Biden is adding on to that or not.
Hold on, if the steel in a soup can is 2.6 cents based on PapaDaves figure and the proposed tariff is about 120% then the extra cost is 3 cents.
But the local soup industry is claiming that the tariffs could cause the cost of soup to rise by up to 30%.
Does that mean that a can of soups cost will rise from 10 cents to 13 cents, if so then they have plenty of room to absorb that 3 cents in the 3000% markup from the 10 cent cost of manufacture to the $3 or more retail price of soup.
Or more likely the industry will just use the excuse of a high tariff ( a whole 3 cents) to raise their prices by 50 cents or a dollar.
And how can the US steel industry be so uncompetitive when one of the major costs of getting that steel to the soup factory is transport of which the local industry avoids the thousands of miles of ocean shipping with the cost of shipping time and port handling fees.
Putting tariffs on solar panels makes no sense if climate change is our biggest threat. Wait, I forgot, now white supremacy is our biggest threat. Bald white guys with swastika tattoos that only seem to exist in prison movies are causing problems everywhere.
Solar panels in many districts enjoy tax subsidies, and regulated refunds from electric grid for watts “sold” on low demand times.
The gov’t should add to the green headwinds!
Give ESG in USAa big foot up.
Climate change is a control by government over something that doesn’t exist and if it did cannot be stopped.
One question. What is the cost of the steel represent to the total cost of the soup? The answer is probably very little but the companies would love to use it as a justification to raise prices.
Secondly I think it would be nice to be able to keep some steel industry and the knowhow to make it just in case the overseas supply is cut off for some reason. I know it goes against Libertarian principles but I am not a Libertarian but lean more to the Hamiltonian side when it comes to commerce.
A typical soup can has 2.6 cents of steel. I remember Wilbur Ross saying that Trump’s tariffs on steel would add 0.6 cents to the cost of a can.
I thought it would be something insignificant like that. Aluminum cans cost a ridiculously small amount and steel ones are the same.
Doug, never forget that Hamilton was the original Central Banker and thought that the average citizen was too ignorant and simple to be trusted with Government. Read his Federalist papers.
He was for a central bank because he knew that to survive the country needed sound money and industry. At that time almost no one was for universal suffrage so you can’t blame him for that. Even if he had grown up in the West Indies he was anti-slavery. He was the smartest of the founding fathers.
There are definitely some industries that need to be protected, not from an economic perspective, but from a national security viewpoint. Imagine, during the Cold War, that we were dependent on the USSR for semiconductors. Or if we relied on Germany in WW2 for our oil field and steel making equipment. I am definitely a libertarian, but I also realize that these chokeholds can be used against us in any war. The real question is when did the US stop innovating and stop developing new technologies, such that we lost the lead in semiconductors and solar cells? My answer, is we became so financialized that engineering prowess didn’t matter
At my local Safeway store, an 18oz can of Progresso soup is $4.49 to $5.49 (depending on week) for a single can! Campbells is $3.99. This is criminal pricing. These same cans used to be $1.99 to $2.49/can with on sale prices at 99 cents to $1.25.
But forget cans. Buy a package of ramen noodles for 20-35 cents, add some spices and your own vegetables and you’ve saved $4 or more dollars for a single serving meal.
Screw Progresso and Campbells.
The real answer is buy veggies(or grow them) and make your own soup. Its really easy. I have not bought a can of soup in 20 years. It takes no time for most soups. Anything processed is a HEIST. You fight the companies with wallet, not complaining or cheering. Ingredients are crapola too in processed foods
Agreed. My current garden has a surplus of tomatoes, and the herb garden is still going strong. After reading this post, I’m making plans to can my own tomato soup, among others my family already enjoys. Besides, one of my kids has celiac, and for some inexplicable reason, soup makers used wheat gluten in their recipes. That crap is unnecessarily in everything anymore.
The salt content of canned soup is nearly the RDA.
As for the wheat gluten, I suspect it is a thickener so that the watered-down soups don’t appear so watery.
Better yet, buy some Noodles, and a ***Box of Chicken Broth, and add VEG and some other ingredients and SOUP IS ON.
Buy a whole chicken. Strip the meat, and ***make your OWN broth.
bingo. processed food is poison.
The reduction in choice that comes from zero percent money “borrowed” the last 14 years being available to corps and the already rich allowing them to buy out their competition and cut the choices in many areas (two choices for canned chili now), allowing price increases to result from less supply, was predictable. Having ten soup companies all competing in the supermarket would bring down cans of soup prices quick enough.
“What’s the Correct Response?
1. Complain
2. Increase tariffs
3. Cheer
The answer, of course, is number three. If China, Germany, and Canada are indeed dumping steel bellow cost, then the nations are giving US consumers a break at their expense.”
None of the above. The correct response is:
“How do I take advantage of this?”
As I keep repeating; it doesn’t matter who is in power; Democrat, Republican, Libertarian, etc.
What matters is figuring out how to profit from whatever they are doing. Because you can’t personally change what they are doing.
Sadly, most folks here choose #1.
I complain on top of taking advantage of it. I like both.
Excellent comment. You are the only sane person posting comments here I was thinking the exact same thing when I read the post.
Cleveland Cliffs is trying to buy U.S. Steel – these are captains of industry trying to profit from Biden’s situation so why not profit myself….
link to axios.com
that should be *buy* not by – Mish – we need edit feature!
it’s a valid thing to want to make money. but if that is your only concern in life, it’s pure nihilism. or as ancient wise men stated, not a life worth living. more important things in our lives than money. i do thank you for your investing input here. i bought SLG today. nyc announced they will be converting millions of office space to residential. SLG should be in good shape. they are high occupied and been in nyc forever. trailing stops on everything though. good luck.
Completely agree with you. For me, health, family and friends all come before money. However, I don’t come here to discuss my health, family or friends. I come here for a single specific reason. To gather economic and investment info that can help me make more money.
Unfortunately, there are a lot of folks who come here to complain, spout political rhetoric, and promote conspiracy theories that they have been duped into believing. I miss the IGNORE feature, because I could reduce the amount of useless nonsense that I am now forced to wade through as I look for the nuggets of wisdom that occasionally pop up here.
Time is precious and I hate wasting it. I avoid the political articles. And I typically only have time to read a handful of economic articles each week. I tend to look for the articles that interest me.
Mish has a good blog, but it would be a lot better with an IGNORE button.
And it would be a lot better if he’d give us his manifesto for how the US should deal with China.
To-date unless I have missed something, he’s always telling us what the wrong things are to do.
Mish, we get it! Tariffs are bad, but what should the next president do to combat China, because we all know Biden is OWNED by Xi?
Please reveal your trade manifesto!
The first nation that embraces free trade regardless of what any other nation does would be a winner.
I have stated that many times before but not recently.
For all his faults, Greenspan was consistently correct about one thing: Free Trade
Trump just announced a plan to apply an immediate 10% tariff on ALL imports if elected president. That will be real helpful to the economy.
It’s economic idiocy.
Post on this coming up.
agree. ignore button is needed in cyber space as we all do it in real world. when one enters a cafe or crowded space from sports to airports, we ignore. when a common small group like family and friends, we know how to ignore the ignoramous and belligerents. i am sure folks ignore me. good for them.
I would really like a “condense” button.
If you click the entire post is reduced to the first sentence.
I think that viewpoint is what every financial criminal has embraced.
It’s called “the ends justifies the means”.
I’m going to an estate sale tomorrow for a lawnmower. I don’t need a mower but the one they are selling is just like mine. I want to use it for spare parts. New wheels alone cost $25 a piece. If it’s in good condition I can keep mine up and running for a long time.
If they have any canned goods I plan on filling up the mower bag attachment with them and be on my way.
You’re right Papa.
Have stuff assembled in some country that has favored nation status insured by kickbacks to the big guy.
Then contract with a legitimate smuggler logistics company to avoid any potential tariffs.
Plenty of profits are there if you just look around.