In other news, big banks are betting on more rate cuts from the Federal Reserve to offset damage from the coronavirus. Fed Chairman Jerome Powell said today the Fed will take action if appropriate.
All this is going to do is kick the can down the road and leave the Fed no room to go down if a recession does arrive because rates are already zeroed out.
Meanwhile, NBC News reports that intelligence chiefs have not released a national threat assessment this year that would have warned about the possibility of a pandemic because it would anger Trump.
Finally, another American metal company that bet on Trump's tariffs on foreign metal to save them is about to go bankrupt and shut down.
“The rest of the world has gamed the tariffs, in our opinion,” Magnitude 7 Metals chief executive Charles Reali told Reuters in an interview. “The Commerce Department tried to help, but missed the mark.”
The grim outlook for Magnitude 7 has been exacerbated by the coronavirus, which is reverberating around the globe while raising fears of a global recession. On Friday, the London Metal Exchange (LME) aluminum price CMAL3 fell to $1,676 per ton, the lowest since October 2016.
“We are in prayer” mode, Reali said. “If things don’t turn around in the next 60 days, I don’t know.”
Magnitude 7 Metals opened to great fanfare about two years ago in a ceremony attended by then-Missouri Governor Eric Greitens. Trump’s 10% tariffs on imported aluminum helped restore more than 400 jobs in New Madrid County, where nearly a quarter of the population lives in poverty. The plant shut down in 2016 when the previous owner, Noranda Aluminum, filed for bankruptcy.
But Reali describes the market for the plant’s generic aluminum product, P1020, as “absolutely terrible.”
“These prices are 1988 and 1989 prices, dollar for dollar. Obviously, the costs are a hell of a lot more today than they were then,” Reali said.
The rest of the world hasn't "gamed the tariffs."
Prices are low because there's no demand. There's no demand because of Trump's trade war. The virus is just making matters worse.
You know what would have actually helped the American metal industry? It's not tariffs. What would have helped is a $1 trillion infrastructure spending bill to increase demand for metal. At the very least, a spending bill should have accompanied the tariffs.
Be careful what you wish for under Trump.