Alternatives to Tariffs: Part Three

 

 

Editor’s note: This is the third in a four-part series

 

In recent weeks, this column has addressed the flaw with tariffs while offering a short list of big things that should be addressed to ensure the long-term viability and global competitiveness of USA-based manufacturers.

 

In the first column I discussed matters around intellectual property. Last week, I wrote of the importance of investing in energy. This week, the focus is on fostering a supply chain for resources that manufacturers need.

 

Over the course of his presidency, and especially towards the end of it, Joe Biden levied a large number of duties upon China, among them a 100% tariff on electric vehicles, 50% duties on polysilicon imports and semiconductors, and 25% tariffs on lithium-ion EV batteries and tungsten.

 

Biden said it was because of the predatory nature of China and Chinese manufacturers and how they, working in unison, undercut US producers. That’s true to point; after all, I experience it literally every day at Confer Plastics as we battle copycat products from China. But, he needed -- and now Trump and Congress need  -- to take a deeper dive…as in deep into the Earth. For almost all of those products that Biden went after, China can make them much cheaper than the USA can primarily because they have the supply chains that provide materials needed for manufacturing.

 

Consider the following:

 

Various semiconductor technologies need gallium and germanium. There is not a domestic supply chain for gallium and China controls 98% of the global supply. The US produces just 2 tons a year of germanium while importing almost all its needs from China which turns out 85,000 tons annually. 

 

Lithium-ion batteries are made of lithium, nickel, cobalt, copper, and graphite. Despite having large reserves, the US produces less than 2% of the world’s lithium and almost two-thirds of our economy’s needs come from China. The US imports about $2.5 billion of nickel every year, while only mining 17,000 tons of the material which is shipped overseas for further processing. The US ranks 13^th in the world in cobalt production with the output having decreased in recent years. The US rates highly in copper (5^th), but production was down 11% in 2023 and dependence on imports is increasing every year, especially as electrical demand rises. Graphite is not acquired in the US, yet our economy needs 76,000 tons of it a year. 

 

The US hasn’t supplied any of its own tungsten – used in electronics -- since 2015 and we import $236 million of it annually, with China being the largest source.

 

Then, there are numerous rare earths – 17 elements used in the production of high-tech goods. 60% of rare earth mining and 85% percent of its processing is under the control of China.

 

The federal government needs to fixate itself upon these significant disadvantages and ensure access to these important resources.

 

President Trump understands this. That’s why just days ago he mentioned rare earths and minerals in his public style of negotiations with Ukraine, continuing talks that he actually began with that nation’s leader, President Zelensky, last fall, well before our election. He has openly said that in exchange for US aid in terms of weapons and cash Ukraine should grant us access to those inputs, something Zelensky is happily onboard with.

 

That’s a start, but it’s also a huge gamble – and a huge investment of time and hopeful patience -- to bank on supply chains in war torn regions and nations under duress. We need to engage our peaceful neighbors, too.  

 

We get, and should continue to get, many minerals and metals from Canada. They account for $47 billion of US mineral imports, which exceeds China’s deliveries to us by a whopping $20 billion. We need to overcome the damage done in recent weeks with the hubbub over the threatened trade war. And, it should be noted USA-Canadian political relations weren’t the healthiest even before Trump – Biden was cold and distant with Canada. We’ve got a lot of work to do, knowing Canada is important to us and we to them.  

 

And, we’ve got a lot of work to do to develop a domestic supply, the ultimate in reliability and prosperity.

 

The reserves for many of those resources are here. We just have to get them and finish them. And, it has to be done wisely, with proper stewardship of the environment – one reason that we’ve abandoned these supply chains is how dirty it can be to extract and process what is extracted from the Earth. America has very bright minds and we continue to develop them in our best schools and universities, and our innovative nature and private and public investments can find the right and just ways to access and deliver what industry needs.  

 

Minerals are the building blocks of everything in the universe – including industry. Let’s put significant political momentum behind building a better supply chain. By not mining and processing the minerals and elements we need, our manufacturers, our economy, and our national security will be threatened by China and other countries for the long haul.  

 

 

From the 08 February 2025 Greater Niagara Newspapers and Wellsville Sun

Exploring the Western NY Wilds: Winterkill, coming to small pond near you

 

The winter of 2010-2011 was not kind to WNY landowners who have bass ponds on their property. Most ponds in the area froze over on Thanksgiving and didn’t thaw until Easter. We weren’t blessed with the periodic thaws and rains that keep smaller local waters ice-free or a little open on occasion in the winter months.

That ice cap resulted in significant winterkill and many disappointed anglers that spring as carcasses of fish, large and small, washed up on shore. The ponds on our farm were hard hit – our walleye population was completely decimated and trophy-sized bass in excess of 5 pounds littered the shoreline.

It was really heartbreaking. You do everything you can to manage a decent recreational fishery for your family and then Mother Nature has her own plans.

In the nearly 15 years since, ponds faced with that adversity have recovered. It takes a while to grow trophy bass in this area as our “growing seasons” are too short. But, we were finally getting back to the glory days (the setbacks being a less potent winterkill in 2014-2015 and another, much smaller one in 2021-2022).

But, as close as landowners were to revitalizing their trophy fisheries, this winter happened.

This hasn’t been a drawn-out freeze (most local ponds didn’t glaze until mid-December), but the severity of the cold, the depth of the ice and the amount of snow cover atop the ice all mean that a winterkill is in the cards, and one that will likely rival the most recent events. 

How does winterkill happen?

Fish, like all animals, need oxygen. The oxygen they breathe in the water comes from two sources: The byproduct of photosynthesis of algae and weeds growing in that pond and the oxygen that enters the water from the air. Winterkill occurs when ice and snow together cover a pond and prevent both of those from occurring.

Ice cover will, of course, prevent oxygen from entering the water from the air and wind agitation. And, looking at the long term forecast, maps, and models, we’ll have ice on small local ponds well into March.

But that’s not the primary cause of winterkill. If it was, most area ponds would have significant die-offs every year.

It’s the snow that’s the killer. Unlike a normal winter (whatever “normal” may be), we’ve been besieged with a lasting snowpack. Depending on where you are in Western New York, most ponds have been under snow for 6 weeks now. A good melt might not happen until sometime in March.

That snow prevents sunlight from entering the pond. Sunlight is necessary for photosynthesis which still occurs even in the coldest months. So, when the plants can’t get what they need, they don’t grow (and create oxygen) and then they die. Plant decomposition then consumes the oxygen that was needed by the fish. Smaller, shallower ponds without deep holes or underwater springs and with a high density of plants and bass and panfish will be especially harmed.

The fish die a miserably slow death. Basically, they suffocate.

It’s likely that you already have dead fish in your pond. You won’t know it until two or three weeks after ice out. Their corpses are somewhat preserved by the cold water now, but as the water warms and oxygen is introduced to the water, decomposition will speed up, the fish will become buoyant and they will end up on shore. Their bodies will be white, maybe even fuzzy, which is a fungus created by rotting.

Winterkill can be prevented, allegedly, with small commercially-available windmills. But, they don’t work well in frigid winters like this as their wheels freeze over with ease. Some folks also suggest that you periodically run a small outboard motor for a few hours at a time every few days. With the likelihood of deep freeze on a regular basis lately, that’s also an impractical option.

Good long-term pond management can also cut down on winterkill rates by ensuring there is not too much plant life in your pond which consumes a lot of oxygen when it dies. To do that, you would have to use a weed rake in the summer and/or introduce grass carp to the pond. But, you can’t remove all plant life, because you still need those oxygen producers to do their thing in the winter.

Regardless, for most of us, it’s too little, too late to save this winter.

Sadly, this spring and summer, fishing in your pond might not be the cure for cabin fever that you had hoped it would be.


From the 06 February 2025 Wellsville Sun

Alternatives to tariffs: Part two

 

Editor’s note: This is the second in a multi-part series

 

In last week’s column I professed my view about tariffs being bad economic tools as they are nothing more than a form of taxation on consumers made palatable by the perception of patriotism. Especially in this era of uncomfortable inflation, Americans don’t need any more added to their cost of living.

 

Being anti-tariff is probably a contrarian view among US-based manufacturers. But, that doesn’t mean I’m against other forms of public policy that allow producers to be competitive with foreign factories.

 

As I noted last week (in a piece that can be found in the archives of this website), I have plenty of thoughts on that; after all, my team and I at Confer Plastics are in the trenches of the global trade wars every day. But, for brevity’s sake I wanted to limit it to five big ones. In that column I offered two of those with a focus on intellectual property.

 

This week, I continue the discussion about what industry actually needs to survive and thrive with this sentiment: Invest in clean, reliable energy.

 

Manufacturing takes a lot of electricity.

 

At my company, we utilize around 12 million kilowatt hours of electricity per year – as much as all the homes in the village of Middleport times two.

 

But, we’re a small fry in that regard.

 

Consider Micron: The microchip plant that is planned for upstate New York will use 16 billion kWh, which is the total electrical usage of all of New Hampshire and Vermont combined.

 

If you think that’s an incredible amount of energy, it’s just the tip of the iceberg. Throughout the United States, 73 microchip fabrication facilities are under construction or planned for the coming years. Granted, not all of them will be as massive as Micron could be, but they’ll be big. And, that’s just chips – there’s still all the demand created by other manufacturing sectors as well as the growing data center, artificial intelligence, and cryptocurrency markets (a typical data center uses electricity at a magnitude of what my factory does). Total electrical demand for the nation is expected to rise 16% by 2029. That’s a huge leap in just a few years.  

 

So, the only way to hang with the Chinas of the world in both volume and cost of goods, and ensure our country can produce more things than it is now, is to further invest in energy.  

 

Many policymakers have said this can be done and should be done through renewable energy -- solar and wind.

 

Such sources are nice to have in your market basket, but, in order to produce what the economy actually needs, and to compete, they shouldn’t dominate what’s in the grid as they are both intermittent and unreliable. Manufacturers are 24-hour facilities (as are data centers…and the homes that will have electrified heat and cars charging overnight). You need electricity in volume at all hours and not at the mercy of available daylight or the wind. Plus, the demand will be so great that a hyper-focus on such sources would lay waste to the open spaces they are allegedly supposed to protect.       

 

And, it’s protecting that environment that’s just as important as protecting the economy.

 

So, how do we manage both?

 

The quick answer, and likely the best answer, is nuclear energy.

 

In the old days, those were dirty words, based on the fear of fallout in the event of a reactor failure, disposal of waste, and sabotage.  

 

But, those actually were the old days. As with everything, the technology and safety have improved. Small advanced reactors, which run on fuels different from those used on traditional reactors, are becoming the wave of the future and the investments of today. These reactors typically use a coolant other than water and operate at lower pressures and higher temperatures, and the computer and safety controls are top-notch.

 

Not only has the science improved, so has the interest: Billionaires like Bill Gates and Warren Buffett are pouring money into next-generation nuclear energy; New York’s lawmakers are adjusting their tunes in support of nuclear which, just a few years ago, was all but left out of the sources approved by the Climate Act; AI investors like Sam Altman have said their technology can only succeed only with an influx of nuclear; and more environmentalists – independent of environmental groups – are promoting it. 

 

To further the development of such energy, and the construction of small reactors throughout the country, the political and economic energy being directed at tariffs and aggressive trade wars should be rerouted and directed at energy itself. Tariffs are a bandage. If you really want to stem the bleeding of manufacturing from our borders, having cheap, reliable electricity is paramount. Without electricity, you don’t have production. It’s that simple.         

 

President Trump has repeatedly mentioned energy as a key part of his campaign and presidency, but, by his speeches, it seems like his focus is more on oil and gas. Hopefully it’s not. The federal government must continue to invest in nuclear, as it has of late (for example, the $4 billion, 500 megawatt TerraPower project in Wyoming received half of that in federal funding). It has to be all hands on deck if you want the things in modern life that you take for granted…and if you want them made in America.

 

 

From the 01 February 2025 Greater Niagara Newspapers and Wellsville Sun

Alternatives to Tariffs: Part One

 

Editor’s note: this is the first in a two-part series

 

My coworkers at Confer Plastics and I are in the trenches of the global trade wars. Literally every day, we are competing against Chinese manufacturers that copy our products. The marketplace here in the States holds quite a few lookalikes of our swimming pool products and there is a growing number of knock-offs of our hot tub steps – in just the past two years alone, nine of them have appeared.

 

To keep that competition at bay we devote a lot of time, energy, and money into protecting our products, place in the industry, and people. We investigate every new product that looks similar, issue cease and desists to retailers carrying definite infringements, engage our legal representation on a regular basis, and put a princely sum of money into developing and locking up our intellectual property in its various forms.

 

You would think that would make me the poster child for tariffs; after all, those added costs could be a deterrent to the overseas scoundrels and scofflaws and the domestic distributors who put their products into US markets.

 

That’s not me.

 

I hate tariffs.

 

Tariffs add to the cost of living because the foreign producers and their networks here aren’t going to eat the charges, they are going to pass them on to their US consumers. In this era of endless and frustrating inflation, I don’t want to see my customers – who are decidedly middle class – or any family losing their purchasing power to this propagandized, incognito form of taxation. Many of those consumers adore tariffs because the government has them believing they are sticking it to the outsourcers, importers, and bad guys, when, in reality, it’s they who are being penalized.

 

It’s especially maddening when tariffs are thrown around indiscriminately and applied to everything -- as President Trump has threatened to do -- including things our economy is incapable of making in the volume we need or at all, such as Canadian aluminum and energy, or Mexican produce that keeps our nation fed outside of our growing seasons. The burden becomes inescapable and indisputable. You can’t temper an increasingly higher cost of living by only adding to it. It’s no different than his predecessor, President Biden, jacking up the duty on Canadian softwoods used in construction to nearly 15% while also saying there’s an affordable housing crisis in the United States.

 

I would prefer that our federal government abandon tariffs and instead work on foreign and domestic policies that make US-based mining, manufacturing, and agriculture more attractive and more affordable.

 

I have many suggestions to make that so, but I’ll limit it to my Top Five. This week I’ll address two of those ideas, with a focus on intellectual property.

 

Create an international culture around intellectual property.

 

Why do Chinese producers so shamelessly copy products and engage in corporate espionage? It’s because they are indifferent to the value and importance of intellectual property. Protecting and preserving designs, copyrights, trademarks, and trade dress is of little interest to them likely due to cultural issues: By living under numerous communist philosophies and dictates they devalue the individual – and there’s nothing more individualistic than ideas.

 

Rather than expending so much effort in creating friction with our nation’s third largest trading partner, federal officials should find ways to temper the sources of frustration with that relationship and develop a universal understanding and appreciation of IP and a protective framework around it.

 

Provide IP support to the little guys.

 

As a mid-sized business we have the resources -- and the hunger, knowledge, experience, and outside partners – to fight infringements, every one of them, and develop armor for our goods beginning at the earliest stages of product development.

 

Smaller businesses aren’t in that position. Maybe they don’t have the revenues. Maybe no one has ever educated them on how to do it. Maybe they aren’t aligned with good legal representation. Maybe they don’t believe their idea is unique. Maybe they don’t have the time.

 

Whatever their reasons may be, we need to remove the obstacles – and the threats, foreign and domestic -- that could inhibit their business’s growth.

 

My suggestion is that the federal government go one of two routes. One, empower the US Patent and Trademarks Office to create a consultation or legal service that will engage small manufacturers in all phases of IP and help them develop, file, and maintain it. Or, two, allow smaller manufacturers to get substantial grants that would apply to the utilization of outside legal services in the protection of IP. Under both scenarios, I believe a threshold for annual revenues should be $5 million because it’s the little guys who need the help in fighting knockoffs so they can one day become the big guys.

 

In next week’s column, I’ll look at three other alternatives to tariffs in hopes of keeping those surcharges away while still emphasizing the competitiveness of America’s makers of things.  

 

 

From the 25 January 2025 Greater Niagara Newspapers and Wellsville Sun