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Trade Fact of the Week: American steel output lower in 2023 than in 2017; aluminum about the same as 2017.

Posted on by Max Sherrill

FACT: American steel output lower in 2023 than in 2017; aluminum about the same as 2017.

THE NUMBERS: U.S. steel use* –
2023:   93 million tons
2022:   96.9 million tons
2021:   98.9 million tons
2012-2017 average: 100 million tons

* U.S. Geological Survey, annual ‘apparent consumption’’

WHAT THEY MEAN:

Six years later, how have Trump-era metals tariffs worked out? Did the U.S. wind up making more steel or aluminum? If so, did the tariffs damage metal-users like auto companies or machinery makers? And if so, how did they respond?  Some perspectives on these questions, drawn from the U.S. International Trade Commission’s modeling estimates along with recent data on metal output and consumption:

The Basics: In the first week of March 2018, the Trump administration decided to impose tariffs of 25% on most imported steel products, and of 10% on most imported aluminum. These were added on top of pre-existing tariffs, mostly in the range of 2% to 5.7% for aluminum and 0% to 3% for steel. (Note: The pre-2018 rates oversimplify, as many steel and some aluminum products also have additional “anti-dumping” and “countervailing duty” tariffs. See below for a bit more.) The legal basis was a little-used U.S. trade law clause — “Section 232” — dating to 1962, which authorizes presidents to indefinitely “adjust” imports on grounds of national security. The Department of Commerce, which administers this law, argued for limiting imports in two Jan. 2018 reports on the grounds that ready access to these metals has security implications and rising imports had cut U.S. output. The resulting tariffs have mostly stayed in place since, with changes such as the substitution of quotas for tariffs for Korea and the EU and exemptions for Canada and Mexico.

What has happened since? Abstract economic logic suggests that a large new tariff should create a four-phase chain of events something like this:

(i)    Tariffs raise prices for the relevant imported good, in this case the two metals.
(ii)    U.S. buyers — in this case, industries such as machinery and auto factories, construction firms, and canning industries — shift purchasing to local varieties.  Imports therefore fall and the “domestic” share rises.
(iii)    As “consumer” industries pay more for the good, they lose some competitiveness vis-à-vis imports at home and in export competition abroad, and therefore risk also losing some production and employment.
(iv)    They respond by trying, to the extent possible, to use less.

The Commerce Department’s 2018 reports admitted that phase (iv) was theoretically possible, but said it probably wouldn’t materialize in reality because strong GDP growth and higher federal spending on metal-using products would offset higher prices. Thus capacity utilization would rise, and U.S. mills and smelters would grow more stable and profitable. Here’s their steel prediction:

“By reducing import penetration rates to approximately 21 percent, U.S. industry would be able to operate at 80 percent of their capacity utilization. Achieving this level of capacity utilization based on the projected 2017 import levels will require reducing imports from 36 million metric tons to about 23 million metric tons. If a reduction in imports can be combined with an increase in domestic steel demand, as can be reasonably expected [with] rising economic growth rates combined with the increased military spending and infrastructure proposals that the Trump Administration has planned, then U.S. steel mills can be expected to reach a capacity utilization level of 80 percent or greater. This increase in U.S. capacity utilization will enable U.S. steel mills to increase operations significantly in the short-term and improve the financial viability of the industry over the long-term.

In sum, the administration’s hope and prediction was that the U.S. would be producing more metals, since the policy “would enable U.S. steel producers to operate at an 80 percent or better average annual capacity utilization rate based on available capacity in 2017.” The analogous goal for primary aluminum was a rise in production to 1.45 million tons, and of smelter capacity utilization to 80%.

Phase i: Imports Fall, 2018-2019: U.S. statistical agencies such as the Census and the U.S. Geological Survey publish regular data on metal trade, use, and production. The trade figures show that after the tariffs went on in early 2018, imports of metals did in fact drop. Steel imports fell from the 36 million tons mentioned in the Commerce report to 25 million tons in 2019, quite close to their 23-million-ton goal. Aluminum imports went down from 6.2 million tons in 2017 to 5.3 million tons in 2019. Both declines seem to have lasted, though with some volatility and fluctuation; 2023 imports were 25 million tons for steel and 4.8 million tons for aluminum.

Phases ii & ii: Metal Output Up But “Downstream” Industries Contract, 2020-2021: The U.S. International Trade Commission’s formal five-year report last March estimated that in 2020 and 2021, the tariffs had raised U.S. steel and aluminum output by about $2.2 billion, as compared with a hypothetical case in which the administration did not impose tariffs. Meanwhile, they cut the output of U.S. metal-using manufacturers (mainly machinery, auto parts, and tools and cutlery) by about $3.5 billion. So overall, ITC’s estimate was that between 2017 and 2021, the tariffs had increased the metals production relative to a no-tariff scenario, but left the overall U.S. manufacturing sector a bit smaller.

Phase iv?: Output and Metal Use/2023: No such formal estimate yet exists for 2022 and 2023. However, according to the U.S. Geological Survey’s annual “Mineral Commodity Surveys”, by 2023 Americans were using less steel and aluminum than they had before 2018. These reports show that from 2012 to 2017, the U.S. economy used an average of 100 million tons of steel and 5.23 million tons of aluminum per year. (Using USGS’ “apparent consumption” metric.) The 2023 U.S. economy, though about 10% bigger in constant, inflation-adjusted dollars than that of 2017, used only 93 million tons of steel and 4 million tons of aluminum — respectively 7% less and 20% less than before. Put another way, where in 2017 the U.S.’ $20.2 trillion GDP used on average 5100 tons of steel and 290 tons of aluminum per real $1 billion in output, the $22.4 trillion 2023 economy needed only 4,156 tons of steel and 179 tons of aluminum per $1 billion.

Thus, though imports remain close to the levels the Commerce Department’s 2018 reports envisioned, U.S. metal production has fallen back to pre-tariff levels. According to USGS, steel mills poured out 81.6 million tons of metal in pre-tariff 2017, and got up to 87.8 million tons in 2019.  In 2022, though, they were back to 80.5 million tons; in 2023, a slightly lower 80.0 million.  Primary aluminum smelters likewise, having raised output from 741,000 tons in 2017 to 1.09 million tons in 2019, had fallen back down to 750,000 tons in 2023. Nor did the Department’s prediction of higher capacity utilization prove realistic. The Federal Reserve’s “FRED” statistical service reports 74.2% in 2023, statistically about the same as 2017’s 73.6%. And actual capacity is down from 111 million to 104 million tons in steel, and from 2 million to 1.36 million tons in aluminum.

Analysis of this should be a little cautious, as metal use (especially in aluminum) can be volatile. But it’s unusual to see a sustained decline in use during periods of strong economic growth like that of 2021-2023. And it may be that (setting aside international reactions and retaliations, and impacts on metal users like the auto parts and machinery factories) we are now in Phase (iv), and the tariffs’ main current effect is “lower use of metals.” Not really what the DoC was advertising six years ago.

FURTHER READING

Analysis:

USITC analysis and estimates of the ‘232’ tariffs (see pp. 124-133).

Academics Kadee Russ & Lydia Cox forecast in February 2018 that metals tariffs could raise metal output, but likely at the cost of jobs and production in other manufacturing industries.

… and they look back from 2021.

Data: 

FRED (“Federal Reserve Economic Data”) has steel capacity utilization trends from 1970 forward.

The U.S. Geological Survey’s mineral commodity statistics have annual reports on steel and aluminum output,  imports and exports, capacity, and employment back to the early 1990s.

… and for real enthusiasts, a spreadsheet with data back to 1900.

And references:

The “Section 232” site for the Commerce Department’s Bureau of Industry and Security, with links to the 2018 reports on steel and aluminum.

… or direct to the 2018 steel report.

… and the 2018 aluminum report.

And some tariff explanation:

Steel and aluminum typically have “MFN” tariffs in ranges from 2% to 5.7% for aluminum and from 0% to 3% for steel. Real-world policy is complex, though, as steel in particular is often also covered by “anti-dumping” and “countervailing duty” tariff penalties outside the regular tariff schedule. The Commerce Department reports that of the 685 AD and CVD “orders” currently in place, 309 cover steel and steel products, and a more modest 32 cover aluminum.

Here’s the U.S. tariff schedule, with steel in Chapters 72 and 73, and aluminum in Chapter 76.

And the Department of Commerce’s tally of AD and CVD “orders” by country, industry, date, and product.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

Ryan for The Wall Street Journal: LNG Export Ban Is Atrocious Politics

Posted on by Max Sherrill

By Tim Ryan

Many climate activists are celebrating the Biden administration’s decision to curtail exports of liquefied natural gas. The policy, however, is a political misstep and not only for the reasons most critics give. For a moment, set aside the national-security implications—that limiting American exports will punish our allies around the world—and the concern that this decision may spur European and Asian countries to burn more coal. By picking at a cultural scab some of us in the Democratic Party have worked to heal, the policy also risks alienating key voting blocs from Joe Biden’s campaign and climate policy writ large.

This is a political challenge I know personally. When I used to make my weekly journey from Youngstown, Ohio, to Pittsburgh on my way to Washington, I passed an enormous “cracker plant” being constructed off the expressway—a facility that processed ethane and other components of the natural gas being extracted from Appalachian shale formations. As a Democratic congressman, I looked on with hope and pride: Our region was creating well-paying union jobs in an industry that was fighting climate change by retiring coal in favor of cleaner gas.

What those celebrating the LNG export pause don’t understand is that the people working in that cracker plant, as well as the voters who thrived in the fracking boom, aren’t all climate-change deniers, which I discovered through conversations with constituents. Though they once resisted the idea that the climate is changing, many told me that they now believe in climate change and agree that extractive and energy-producing industries do need to change and become cleaner. The employees at that cracker plant rightly saw their work as their contribution to progress. The natural gas they were pulling out of the ground was supposed to replace dirty coal and nurture clean-energy businesses in the region. They had gone from being labeled as part of the problem to part of the solution—and they were proud.

Keep reading in The Wall Street Journal.

Navigating the Winds of Change: Asset Managers’ Strategic Shifts in Climate Initiatives

Posted on by Max Sherrill

The finance industry has, until recently, taken a collective approach to climate change, showing a united front in addressing one of the great challenges of our time. But that groupthink approach is evolving, as seen by recent third-party engagement modifications made by top asset managers such as BlackRock, JPMorgan Asset Management, and State Street Global Advisors. These coalition changes, especially in how they interact with Climate Action 100+, a climate-focused, investor-led program that was introduced in 2017 that recently announced an evolution in focus known as “phase 2,” (described by the organization as “markedly shifting the focus from corporate climate-related disclosure to the implementation of climate transition plans”), indicate a subtle recalibration as opposed to a retreat from environmental commitments.

The decision of State Street and JPMorgan to reallocate resources elsewhere, together with BlackRock’s decision to transfer its involvement to its overseas arm, demonstrate the difficult balancing act these multinational behemoths face.  They find themselves at a crossroads where they must continue to carry out their fiduciary responsibilities in the face of shifting market and regulatory environments while attempting to pilot the maiden voyage toward environmental sustainability. This shift demonstrates a wider trend in the financial sector: the path to a low-carbon, sustainable future is complex and calls for a flexible multimodal strategy that respects global decarbonization targets while navigating a patchwork of regulatory frameworks and client preferences.

In its announcement, BlackRock previewed the launch of a new stewardship option that will provide clients additional decarbonization engagement and proxy voting options. Furthermore, the introduction of programs such as Decarbonization Partners by Temasek and BlackRock highlights a consistent commitment to creative solutions to climate-related problems. This pledge to make strategic investments in next-generation businesses that are necessary to achieve a net-zero global economy by 2050 is an example of how the investment landscape is changing in terms of how it approaches climate action, and- to be blunt- a more efficient use of institutional resources and expertise being applied to climate efforts. (and yes, potentially profitable.)

The shift towards proactive participation is also shown by JPMorgan Chase’s Center for Carbon Transition (CCT), which offers bespoke assistance and in-house expertise to worldwide clients as they navigate the low-carbon transition. This project, which aims to match the company’s finance portfolio with the goal of net-zero emissions by 2050, demonstrates an understanding and actionable willingness to address the challenges associated with making the transition to a sustainable energy future.

State Street Global Advisors has demonstrated its active involvement in influencing policy directions that promote sustainable investment practices by continuing to invest in research and content platforms to interact with policymakers on decarbonization and the clean energy transition. This proactive approach to innovation and policy formation shows a dedication to the ultimate objective of realizing a path to a low-carbon economy.

These calculated realignments show the extent to which the financial industry understands the challenges and opportunities associated with the shift to more sustainable energy sources. (It is also a tacit acknowledgement that a “one size fits all” approach itself, isn’t sustainable.)  Rather than indicating a turnback, these organizations are improving their tactics to more effectively advance the decarbonization of the world economy. This sophisticated approach highlights the value of flexibility, client autonomy, and active participation in the dynamic field of climate action.

Ultimately, these tactical changes, however, continue to underscore a collective, if changing, commitment to helping the global energy transformation as the financial world continues to work through the great unknown of the energy transition. This journey, characterized by thoughtful analysis, demonstrates the industry’s willingness to make the tough decisions posed by a sustainable, environmentally conscious future.

Moss in Bloomberg Law: Disney-Fox-Warner Streaming Deal Faces DOJ Antitrust Review

Posted on by Alex Terr

When Disney bought assets from Fox in 2018, the Justice Department agreed to allow the deal to move forward except for the assets related to sports, calling them “two of the country’s most valuable cable sports properties.”

The same year, the Justice Department lost its effort to block AT&T Inc.’s merger with Time Warner, arguing the deal would let the telecom giant threaten to withhold programming to maximize its profits. Antitrust enforcers argued that the combination of AT&T’s TV-distribution network with Time Warner’s programming would lead to higher prices for consumers. A judge rejected that argument, and an appeals court upheld his decision.

But within a few years, AT&T spun off the business to Discovery Inc. The Justice Department reviewed the deal and ultimately opted against a challenge, though antitrust enforcers warned the companies they could reopen a probe later if warranted.

The Biden administration has been particularly critical of joint ventures in some markets, breaking up a partnership between American Airlines Group Inc. and JetBlue Airways Corp. last year, according to Diana Moss, vice president and director of competition policy at the Progressive Policy Institute.

“They’ve made it look very consumer-friendly in terms of the access issue,” she said. “But as always, the devil is going to be in the details in terms of how hard they compete with each other.”

Read more in Bloomberg Law. 

Untapped Expertise: Historically Black Colleges and Universities (HBCUs) as Charter School Authorizers

Posted on by Max Sherrill

Washington, D.C. — For generations, Historically Black Colleges and Universities (HBCUs) have been a catalyst for education progress in America, including transforming K-12 education through a combination of initiatives and programs designed to meet the aspirations of students who often lack opportunities. And yet, when parents demand new and better schools for their children, HBCUs continue to represent an under-utilized source of expertise that can help redesign the 21st-century public education system.

Today, the Progressive Policy Institute (PPI) and the National Association of Charter School Authorizers (NACSA) released a report titled “Untapped Expertise: Historically Black Colleges and Universities (HBCUs) as Charter School Authorizers,” which makes the case for expanded partnerships between charter schools and HBCUs to become charter school authorizers. Authorizers are governmentally approved and supervised entities that oversee academic, financial, and operational expectations and school performance. Quality authorizing is a catalyst for expanding access to quality educational opportunities for students and families, especially communities of color.

Report authors Curtis Valentine, Co-Director of PPI’s Reinventing America’s Schools Project, and Karega Rausch, President and CEO of NACSA, argue that HBCUs are natural partners for charter schools due to their long history in education reform and pre-existing relationships. To speed up the pace of school improvement and modernization, America needs more quality charter school authorizers. Currently, the states with the most HBCUs do not allow for higher education authorizers, and the report’s authors call on policymakers to create pathways for capable HBCUs to become strong charter school authorizers.

“HBCUs have played a powerful role in our nation’s education system for generations. As an alumnus of an HBCU, I know firsthand the untapped expertise HBCUs can have on our K-12 education, especially for charter schools — which play a vital role in lowering systemic barriers to high-quality education,” said Curtis Valentine. “HBCUs becoming charter school authorizers is a new and transformative way of achieving that end.”

“Excellent schools built from the aspirations of families remain the north star and high-quality authorizing is key in achieving that end,” said Karega Rausch. “Authorizing well is hard work and we look forward to working with policymakers to create thoughtful pathways for willing HBCUs to be outstanding authorizers.”

The report outlines the steps that state policymakers should take to empower our nation’s HBCUs to become strong charter school authorizers. Charter schools have proven to be a powerful tool for boosting student achievement, especially among low-income families and families of color. By becoming charter school authorizers, HBCUs can build on their historical legacy of transforming K-12 education by strengthening ties between K-12 and higher education and creating strong community institutions that provide opportunities for economic growth.

Read and download the report here.

The Progressive Policy Institute (PPI) is a catalyst for policy innovation and political reform based in Washington, D.C. Its mission is to create radically pragmatic ideas for moving America beyond ideological and partisan deadlock. Learn more about PPI by visiting progressivepolicy.org. Find an expert at PPI and follow us on Twitter.

The National Association of Charter School Authorizers (NACSA) advances and strengthens the ideas and practices of authorizing so students and communities—especially those who are historically under-resourced—thrive. NACSA believes that quality authorizing is essential and must balance access, autonomy, and accountability in overseeing the overall performance of their portfolios of schools. Find out more about authorizing and NACSA at qualitycharters.org.

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Media Contact:

Amelia Fox – afox@ppionline.org, Courtney Hughley – courtneyh@qualitycharters.org

Untapped Expertise: Historically Black Colleges and Universities (HBCUs) as Charter School Authorizers

Posted on by Alyssa Brown

EXECUTIVE SUMMARY

For generations, Historically Black Colleges and Universities (HBCUs) have been a catalyst for transformation in K-12 through initiatives, including diversifying teaching pipelines, starting new schools, and establishing programs designed to meet the aspirations of students far away from quality opportunities.

And yet, in many ways, we have not yet realized the full potential for how HBCUs can drive educational opportunities for all K-12 students. At a time when parents across the country are demanding new and better schools for their children, HBCUs represent an under-tapped source of expertise. This is especially relevant for Black families because of the disproportionate impact that unfinished learning has on them and the systemic barriers to high-quality education that this community has historically faced. HBCUs have a unique history, legacy, and record of advancing Black achievement and wellness, which makes them ideal partners in redesigning public education for the 21st century.

Elevating HBCUs’ Role in K-12 Education

HBCUs and their alumni have played powerful roles in K-12 public education, including charter schools. Alumni are leading outstanding charter learning institutions with exceptional student outcomes, and some HBCUs have partnered with charter schools in effective ways including integrating charter schools on their campuses. This arrangement provides students with a unique experience in which they are introduced to the promise and prestige of higher education earlier in their educational journey. And we believe it is merely the start of a partnership that can have a profound difference in the lives of underserved communities.

Charter schools have proven to be a powerful tool for boosting student achievement, especially among low-income families and families of color. Charter schools are public schools, free and open to all students. They currently serve nearly four million students across 7,700 schools in 45 states and the District of Columbia. When permitted to thrive, charter schools offer families a variety of educational options from which to choose the best fit for their child. They are the opposite of one-size-fits-all schooling. Their unique blend of parental choice, school autonomy, personalized learning, and strict accountability for results illuminates the way toward higher-performing schools for all U.S. students, regardless of their zip code. They create a healthy mix of different types of public schools that helps improve all of public education.

What makes public charter schools innovative and nimble is how they are governed and overseen. The key is charter school authorizers — governmentally approved and supervised entities that decide who is qualified to start a charter school and receive public funding. They determine each school’s academic, financial, and operational expectations; oversee school performance; enforce contractual performance and compliance expectations; and decide which schools should be given the privilege of continuing to educate students.

A practical barrier to quality public school options is the shortage of effective governance and oversight provided by charter school authorizers.

When done well, authorizing is a catalyst for expanding access to quality educational opportunities for students, families, and communities, especially those that have been overlooked, undervalued, and ignored.

But when done poorly — due to overregulation, insufficient institutional commitment, micromanagement, sheer incompetence, or inherent conflicts of interest — weak authorizing contributes to educational failure.

Authorizing charter schools is a relatively new way of making transformative change in K-12 governance and oversight. HBCUs as authorizers is a means to a critical end and one HBCUs have been doing since their inception: better educational opportunities for all students.

To speed the pace of school improvement and modernization, America needs more strong charter school authorizers. Given their capacities and expertise, the nation’s HBCUs are natural candidates to assume this role.

Recommendations for Policymakers:

NACSA and PPI urge state policymakers to take the following steps to start empowering willing HBCUs to become strong charter school authorizers:

• Query college leaders to determine if there is at least one HBCU interested in becoming a high-quality charter school authorizer (HBCUs can contact state policymakers directly to express interest);

• Examine national best practices on quality authorizing and how other states have structured authoring infrastructures to determine the best fit for your state;

• Determine the scope of HBCU authorizing (e.g. one institution or multiple institutions) and any other limitations (e.g. only HBCUs of a certain size);

• Enact legislation allowing for one or more HBCUs to be authorizers;

• Ensure there is sufficient funding and resources for authorizing functions.

A Stronger Future for Education

By becoming charter school authorizers, HBCUs can build on their historical legacy of transforming K-12 education in at least four ways:

1. Redesigning Public Education: Overseeing and expanding quality public school options to improve the outcomes of all students.

2. Building on educational legacies: Overseeing high-quality and effective K-12 schools can help HBCUs build on their rich legacy by deepening connections with local communities.

3. Strengthening ties between K-12 and higher education: HBCU authorizers can develop unique partnerships with schools they oversee, providing access to higher education campuses, creating pipelines of new students, opportunities for dual enrollment, mentorship programs between schools and students, and research opportunities between faculty and schools.

4. Creating strong community institutions and wealth: New charter schools create new facilities and jobs, with opportunities for economic growth in communities, such as Black vendors who can provide new charter schools with products and services.

Our country needs stronger educational opportunities that advance the learning of all students, Black students in particular. HBCUs as charter school authorizers is a transformative way of achieving this goal. For HBCUs looking to expand their impact and strengthen their own institutions, becoming a charter school authorizer is an idea whose time has come.

Read the full report. 

Ainsley in The New York Times: The U.K. Labour Party’s Worst Enemy Might Be Itself

Posted on by Alex Terr

The drama over the green policy allowed the Conservatives to paint Labour as a party of U-turns and flip-flops. But Labour allies said that was a reasonable price to pay to avoid being tarred as fiscally irresponsible. Mr. Starmer and Ms. Reeves are determined to reassure voters that taxes will not rise under Labour and that the party can be trusted with the public finances.

“There are some really serious considerations about the country’s fiscal position, Labour’s policy priorities, and how they match what they want to do in government with the reality they are going to face,” said Claire Ainsley, a former policy director for Mr. Starmer.

“I am not surprised if that took some weeks, if not months, for there to be proper conversations,” said Ms. Ainsley, who now works in Britain for the Progressive Policy Institute, a Washington-based research institute.

Read more in The New York Times. 

Jacoby for Capital Tonight NC with Tim Boyum

Posted on by Max Sherrill

We’re now just 10 days out from the next Republican presidential primary. A new poll from Winthrop University is taking a look at the race.

The director of Winthrop’s Center for Public Opinion and Policy Research, Dr. Scott Huffmon, joins with more.

Meanwhile, Congress continues to face roadblocks in passing an aid package for Ukraine.

Tamar Jacoby is the director of the Progressive Policy Institute’s New Ukraine Project and currently lives in Kyiv. She joins virtually with more.

Watch the interview here.

Trade Fact of the Week: Each January, the U.S. imports 11 million roses a day

Posted on by Max Sherrill

FACT: Each January, the U.S. imports 11 million roses a day.

THE NUMBERS: Top sources of roses, January 2023 –
Colombia 177 million stems
Ecuador 137 million stems
Guatemala     4 million stems
Ethiopia     2 million stems
Mexico     1 million stems
Kenya     0.4 million stems

 

WHAT THEY MEAN:

Geoffrey Chaucer’s 699-line Parliament of Fowls (1382) makes the first English-language link between flowers, romance, and Valentine’s Day. The relevant passage:

“I]n a launde, upon an hille of floures,
Was set this noble goddesse Nature;
Of braunches were hir halles and hir boures,
Y-wrought after hir craft and hir mesure;
Ne ther nas foul that cometh of engendrure,
That they ne were prest in hir presence,
To take hir doom and yeve hir audience.
For this was on seynt Valentynes day,
Whan every foul cometh ther to chese his make.*

* “When every bird comes to choose his mate.”

Seven centuries later, the National Retail Federation guesses Americans will spend about $25.8 billion on Valentine gifts this year.  A tenth of the money, $2.5 billion, goes to flowers. Before this evening’s candles light up, here’s a quick look at the four-step network of agriculture and farm labor, truckers and and pilots, policy professionals and front-line civil service workers, and small businesses that get the long-stemmed reds from tropical farms to florist storefront to you:

Growing and Picking: Worldwide flower trade totals about $10 billion annually. The Dutch are the top importers, with Americans second at about $2 billion per year. Colombia was last year’s top U.S. source at $1.1 billion, followed by Ecuador at $500 million. U.S. domestic floriculture, a $6.5 billion industry, supplies about a quarter of U.S. flowers, and centers more on garden and potted plants than cut stems.

By bloom type, 2.7 billion roses accounted for half the value of U.S. imports. Colombia provides about 1.5 billion stems, grown on about 8600 hectares of farmland near Bogota and harvested by about 100,000 rural workers. Next door Ecuador’s 1.0 billion are not far behind. The remaining 200 million roses arrive variously from Guatemala, Mexico, Ethiopia, and Kenya; among other flowers, Thailand is the top orchid source and Costa Rica places near the top in lilies.

Transport: Roses arrive year-round, but the large import pulses in late January/early February and late April/early May — just before Valentine’s Day and Mother’s Day — include about half of annual deliveries. The short life of a blossom means that flower trade is mainly an air cargo business.  Once picked and boxed, roses travel in chilled trucks from farms to El Dorado airport near Bogota and Mariscal Sucre in Ecuador, with most Valentine’s roses — about 90% — arriving at Miami International Airport via (according to USDA) 30-35 daily chartered wide-body flights. Likewise in early May, orchid farms around Bangkok connect via Tokyo to deliver most U.S. prom-night corsages.

Transit: Customs and Border Protection officers inspect the incoming flowers for phytosanitary health on arrival at Miami. CBP reports inspecting 1.23 billion flowers at the airport last year and intercepting 1,975 pests — mostly nursery-threatening thrips, moths, and caterpillars rather than customer-intimidating scorpions or tarantulas.

Policy: Though technically assigned a 6.5% tariff, most flowers arrive in the U.S. duty-free under free trade agreements and “preference” programs. The U.S.-Colombia FTA waives the tariff for roses (and chrysanthemums, lilies, etc), saving florists and their customers about $65 million a year. The African Growth and Opportunity does the same for Ethiopian and Kenyan blossoms. Florists buying Ecuadoran roses and Thai orchids, though, must wait for Congress to revive the Generalized System of Preferences to get the same benefit.

And last: Having landed at the airport about a week ago, flower shipments move by refrigerated truck or domestic cargo flight to wholesalers and warehouses. By Monday, they have reached the roughly 12,000 American florists (mostly small businesses, employing about 64,000 people this year according to the Bureau of Labor Statistics); and from them to you.

So that’s the business side. Last word to Chaucer, also from the Parliament:

The lyf so short, the craft so long to lerne,     / The life so short, the art so hard to learn.
Th’assay so hard, so sharp the conquering,  / The attempt so hard, the conquest so sharp
The dredful Ioy, that alwey slit so yerne,       / The fearful joy, that ever slips away so fast
Al this mene I by love.                                   / By all this I mean love.

FURTHER READING

Chaucer’s Parlement of Foules:

The original Middle English; Seynt Valentyne shows up in lines 305-312.

A modern-English translation.

Chaucer was a trade professional as well as a romantic poet, having spent the years 1374-1386 tallying wool exports and wine tariff revenue as Richard II’s Controller of Customs. They paid him 10 pounds a year plus a gallon of wine per day, and he wrote the Parliament in off hours.  The U.K.’s National Archives looks at Chaucer’s trade policy career.

From flower-bed to florist: 

The Colombian Flower Growers Association, ASCOLFLORES, recalls its first U.S.-Colombia FTA shipment.

Air cargo firms manage Colombia-to-Miami charters.

Miami International Airport (2023) explains flower transit.

Customs and Border Protection on letting flowers in while keeping thrips out.

The National Retail Federation’s 2024 Valentine forecast.

V-Day stats from the Society of American Florists.

… and also from the SAF, an appeal for GSP reauthorization.

Elsewhere:

The Netherlands is the world’s largest flower buyer at about $5.4 billion a year, or half of the value of flower trade. Most of this transits the gigantic Aalsmeer flower market just outside Amsterdam, which serves as the center for European flower trade and the main market for growers in Kenya and Ethiopia. Royal Flora Holland has the facts and figures.

And last:

How did roses become the Valentine’s Day standard? It’s likely no one really knows, but one theory traces the tradition to a series of letters sent to U.K. friends in 1718 by Mary Wortley Montagu from the Ottoman court, and published in book form a half-century later in 1763. (The Ottoman nobility were rose and tulip enthusiasts; roses are Persian by origin.) Letter #42 records a ‘flower language’ in which seraglio ladies assigned emotional meanings to different flowers and luxury products, and used them to send coded notes to friends and outside admirers.  Nineteenth-century French and Brits then built this into a gigantic “flower language” (“floriography”); an 1819 book by Charlotte Delatour cataloged meanings for 713 flowers (including 29 separate rose varieties), nursery plants, and other garden products such as fruits and tree branches.

People with deep gardening expertise and memorization powers could use this to convey signals pretty far beyond modern candy-heart romance — all the way (at least to a modern eye) from “platonic affection” and “romantic love” to “alternative life-style” and “stalker”.  For example, while a generic rose means “love,” and a white rose means “I am worthy of you,” a dog rose conveys an eyebrow-raising “pleasure and pain” message, and a maiden blush rose a frankly menacing “if you lose me, you will find it out.”

The need to keep these hundreds of definitions straight, and to be very sure you know which rose is which, must have put amateurs at constant risk of embarrassing blunders and awkward misunderstandings.  Modern flower association lists are much shorter and PPI trade staff think it’s probably better that way. Some more examples from Delatour, though, for those interested:

Cypress branch:          “Death and eternal sorrow”
Daffodil:             “Deceitful hope”
Daisy:                 “Beauty and innocence”
“Grass-leaved goosefoot”     “I declare war against you”
Jasmine:             “Sensuality”
Meadow saffron:        “My best days are past”
Potato                “Benevolence”
White poppy            “Sleep”

Lady Mary’s Turkish Embassy Letters.  See Letter 42 for the flower language, also Letter 25 for brief nudity, Letter 9 for a rant against Viennese fashion (“monstrous and contrary to all reason”), and Letter 35 for pioneering vaccination advocacy.

Delatour’s original Artistic Language of Flowers.

And a modern essay on the origins and practice of floriography, with a list of known flower messages.

ABOUT ED

Ed Gresser is Vice President and Director for Trade and Global Markets at PPI.

Ed returns to PPI after working for the think tank from 2001-2011. He most recently served as the Assistant U.S. Trade Representative for Trade Policy and Economics at the Office of the United States Trade Representative (USTR). In this position, he led USTR’s economic research unit from 2015-2021, and chaired the 21-agency Trade Policy Staff Committee.

Ed began his career on Capitol Hill before serving USTR as Policy Advisor to USTR Charlene Barshefsky from 1998 to 2001. He then led PPI’s Trade and Global Markets Project from 2001 to 2011. After PPI, he co-founded and directed the independent think tank ProgressiveEconomy until rejoining USTR in 2015. In 2013, the Washington International Trade Association presented him with its Lighthouse Award, awarded annually to an individual or group for significant contributions to trade policy.

Ed is the author of Freedom from Want: American Liberalism and the Global Economy (2007). He has published in a variety of journals and newspapers, and his research has been cited by leading academics and international organizations including the WTO, World Bank, and International Monetary Fund. He is a graduate of Stanford University and holds a Master’s Degree in International Affairs from Columbia Universities and a certificate from the Averell Harriman Institute for Advanced Study of the Soviet Union.

Read the full email and sign up for the Trade Fact of the Week.

Moss for ProMarket: Fans Last? How the Fans First Act Hands Live Nation-Ticketmaster More Market Power

Posted on by Max Sherrill

By Diana Moss

It has been just over a year since the Senate Judiciary Committee held a hearing on the dismal state of competition in the ticketing industry in the United States. The hearing was spurred by the epic meltdown of Live Nation-Ticketmaster’s ticketing platform during the sale for the Taylor Swift Eras Tour. The parallel meltdown of Swifties who couldn’t get tickets galvanized public attention, pulling Live Nation again into the spotlight as a leading U.S. monopolist. The live event behemoth has formidably high and stable market positions in ticketing, concert promotion, and venues, including Ticketmaster’s 70% share of the high-profile ticketing market.

Singer-songwriter Clyde Lawrence spoke at the Senate hearing to visible evidence of a broken market—Live Nation-Ticketmaster is often the only choice for artists to sell tickets to their concerts. To appreciate the full harm from the live events monopoly, let’s remember that the Taylor Swift debacle wasn’t the first. Trouble over Ticketmaster’s domination was brewing long before.

Read the full piece in ProMarket.

PPI Proposes Path Forward on White House LNG Export Pause

Posted on by Max Sherrill

Washington, D.C. — The Biden administration’s recent decision to pause expansion of LNG export terminals has created uncertainty among producers and consumers of U.S. natural gas, including America’s allies abroad. Today, the Progressive Policy Institute (PPI) released a memo to the White House proposing a way forward: Lifting the pause for companies that submit to third-party measurement and certification of their methane emissions.

PPI proposes that the Department of Energy (DOE) act swiftly to design an environmental public interest test for LNG exports that is meaningful, workable, and transparent. Such a test could be built around a third-party verification of methane performance for the entire supply chain. Current certification standards cover roughly one third of U.S. gas production, and ensuring a high environmental standard across exports would benefit both the environment and U.S. companies, especially at a time when major trading partners are implementing similar requirements.

“The indefinite LNG permit pause has created significant uncertainty that risks the economic, national security, and coal-displacement benefits of U.S. LNG exports,” said Elan Sykes, Director of Energy and Climate Policy at PPI. “Paired with key mitigation provisions from the Inflation Reduction Act, methane certification would meet the administration’s climate aims and reassure U.S. allies and trading partners who increasingly depend on a reliable supply of low-methane gas.

U.S. LNG exports play an essential role in meeting global energy demand, especially after Russia’s invasion of Ukraine. PPI’s proposal aims to achieve net emissions reductions on a global scale, vital to combating climate change, without disrupting the LNG industry in the U.S. This industry has grown to play a sizable role in the U.S. economy, with jobs that pay well above the national average and $47.4 billion in exports in 2022 driving the energy sector to a record-high 18% share of overall U.S. goods exported that year.

The Biden Administration has made tremendous progress in America’s clean energy transition, especially through the Inflation Reduction Act, Infrastructure Investment and Jobs Act, and the CHIPS Act. The Administration can continue to build on this success by focusing on emissions reductions at home and abroad through faster domestic permitting, deployment of clean energy, and continued innovation to bring down the cost of low-carbon technologies for the world.

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Media Contact: Amelia Fox – afox@ppionline.org

Ainsley for The Liberal Patriot: The Working-Class Imperative for Labour and Democrats

Posted on by Max Sherrill

By Claire Ainsley

Readers of The Liberal Patriot will be familiar with the argument that the Democratic Party needs to reverse its decline with working-class Americans if it is to create durable governing coalitions—or even win at all, judging by the current state of the polls.

This argument has also been playing out in British politics over the past few years. The Labour Party, historically the party of the working class, was comprehensively defeated by Boris Johnson’s Conservatives at the last UK General Election in 2019. Labour’s fourth successive electoral defeat was all the more painful for the loss of what became known as the “Red Wall”  seats, a phrase coined by Conservative pollster James Kanagasooriam to describe parliamentary constituencies who voted Conservative for the first time in their history.

But the reality is that Labour had been losing support amongst working-class voters for two decades, and until Keir Starmer became leader in 2020 it was insufficiently focused on winning over new and traditional working-class voters to the party. Starmer appears to be reversing that decline, according to research by the Progressive Policy Institute, which commissioned a comprehensive poll of working Americans and working-class Brits ahead of the double U.S. and UK elections in 2024. YouGov’s research for PPI shows that Starmer’s Labour are on course to win a majority of working-class voters once again—but Labour’s six point lead amongst this group is narrower than amongst the general population, with polls showing Labour at least 15 points ahead of the Conservatives amongst all voters.

Keep reading in The Liberal Patriot.

Jacoby for The Bulwark: America’s Fleeting Chance to Resume Leadership

Posted on by Max Sherrill

By Tamar Jacoby

SENATORS, BOTH REPUBLICANS AND DEMOCRATS, made an important start yesterday when they voted 67 to 32 to advance legislation that would free up $95 billion in military and humanitarian aid for Ukraine, Israel, and Taiwan. It was, to be sure, just a preliminary, procedural vote. The Senate still needs to pass the bill, and even then it faces long odds in the House of Representatives. But the Senate vote was an overdue step to stop the disastrous downhill slide in American power and influence in the world. The United States faces a choice: to resume its role as what Secretary of State Madeleine Albright called the “indispensable nation,” or to sit by and watch the world become more dangerous for us and our allies.

Opinions vary on when American global leadership began to wane. Some will point to the Vietnam era; others to the post-9/11 wars; still others to the Obama administration’s effort to “lead from behind.” Then there was Donald Trump’s “America first” approach, which actually meant “America alone.”

President Joe Biden got off on the wrong foot on foreign policy in 2021. Even those who felt it made sense to withdraw American troops from Afghanistan can now agree it was done too abruptly, leaving our Afghan allies at the mercy of a Taliban takeover. But then in 2022, the president changed course. Through 2022 and into 2023, the United States took the lead, inspiring and encouraging the world to support Ukraine as it fought off Vladimir Putin’s brutal, unprovoked invasion. Washington got the ball rolling with military aid and intelligence sharing, and soon our allies in Europe and elsewhere were following suit.

Keep reading in The Bulwark.

Kirsty McNeill for LabourList: ‘Here’s what visiting the US taught me about why progressives win or lose’

Posted on by Max Sherrill

By Kirsty McNeill, PPC

The Labour Party has one job in 2024: delivering Keir Starmer a majority that is deep, durable, disciplined and democratic.

Deep because, to overcome our catastrophic 2019 result, we must bring over voters from every demographic and every corner of the country.

Durable because Labour has to govern with a relentless focus on deserving a second term so that we can win era-defining change, not just history-defying swings.

Disciplined because the country needs a united team that is prepared to take a long-term view.

And, most of all, democratic because we obsess about securing both ongoing enthusiasm for – and participation in – our ambitious missions.

We visited the US to understand voters’ lack of enthusiasm for Biden

It was with this in mind that a delegation, hosted by the Progressive Policy Institute (PPI) and Progressive Britain, travelled to the United States last week.

We were in Washington DC and Virginia to learn from the Democrats and try to understand why voters weren’t more enthusiastic about a presidency of such extraordinary consequence.

Keep reading in LabourList.

 

New data on ridesharing driver earnings

Posted on by The Progressive Policy Institute

How much do ride-sharing drivers earn? Lyft has just released a paper that sheds light on this important policy question. The paper estimates “earnings after expenses” for drivers on the Lyft platform, based on reasonable and straightforward accounting for additional driver costs such as fuel, maintenance, cleaning, and depreciation.

The Lyft paper finds that the median earnings after expenses per “engaged hour” was $23.46 in the second half of 2023. (Lyft defines an “engaged hour” as time spent driving a passenger, or traveling to pick up a passenger). This figure is a useful “peek under the hood” for a major ridesharing company.

However, there’s another question that the Lyft paper does not address: How does $23.46 stack up against the pay for comparable occupations? To answer this question, PPI used data from the BLS Occupational Employment and Wage Statistics (OEWS), which surveys employers to ask about detailed wages being paid for different occupations.

We pulled several data points from the OEWS. In May 2022, the median hourly wage for taxi drivers was $14.75, including tips. The median hourly wage for “shuttle drivers and chauffeurs” was $15.71, and the median hourly wage for security guards was $16.71. And just to give a backdrop, the median hourly wage for all occupations was $22.26 (yes, that seems low, but that’s what the data shows).

Now, these wage numbers do not include employer-paid benefits, which come to an average of roughly 20% of total compensation for part-time workers (based on BLS data). So we adjust the wage figures upwards to account for benefits.  Table 1 shows the comparison.

Table 1: Ridesharing earnings in perspective
Median hourly wages (OEWS) Adjusted for benefits (assuming part-time)
All occupations           22.26           27.83
Security guards           16.71           20.89
Shuttle drivers and chauffeurs           15.77           19.71
Taxi drivers           14.75           18.44
Hourly earnings after expenses
Drivers on Lyft platform           23.46

 

So we see that hourly earnings after expenses for drivers on the Lyft platform is $23.46, 27% higher than a benefit-adjusted hourly wage of $18.44 for taxi drivers who are employees, and 19% higher than the benefit-adjusted hourly wage for shuttle drivers and chauffeurs.

On the other hand, driver earnings per hour are 16%  lower than the benefit-adjusted median for all occupations, including high-skill white-collar occupations. That makes sense.

One final methodological note: The Lyft figures are based on the concept of “engaged time” — time spent driving a passenger, or traveling to pick up a passenger.  It does not include time spent waiting for the Lyft app to identify the next passenger. On the other hand, if the wait time is too long at a particular time of day, drivers are likely to turn off the app and do something else instead, like study for classes, shop for groceries, or take care of children or the elderly.

Similarly, the BLS hourly wage figures do not include time spent commuting to work. If we accounted for commuting time, then wages per hour would be much lower historically, but they would have soared when Americans shifted to working from home, and fallen as they returned to the workplace. The implication here is that flexibility in work arrangements affects the meaning of wage data, whether we are talking about jobs or gig economy work.

From a policy perspective, the Lyft paper suggests that ridesharing drivers are doing reasonably well in terms of earnings compared to similar occupations. That allows us to concentrate on other aspects of work, such as making sure that regulations and the tax code are modified to give gig economy workers access to the safety net while protecting flexibility for workers including caregivers and workers with disabilities.

 

PPI Reports on the Gig Economy:

Regulatory Improvement for Independent Workers: A New Vision (July 2020)

Platform Work and the Care Economy  (November 2022)

Disability and Changes in the Workplace  (November 2023)