The Fire Hose of Chaos: Steel and Aluminum

Peter Zeihan 5 min

We've raised the cost of imported steel and aluminum, but we have not first built out the capacity of the U.S. economy to smelt or foundry more of the stuff itself. Everything is now moving more slowly at a higher expense at a time we just need more.

Chapters

  1. 0:00

    Steel Production Challenges

    Explains the difference between recycled and virgin steel, the need for specific manufacturing types, and how tariffs impact supply.

  2. 3:19

    Aluminum Production Challenges

    Details the similarities in aluminum policy, the lack of domestic raw materials, and the delay in building necessary smelters. Concludes that current policies raise costs and slow down the industry needed to build out domestic capacity.

Key points

  • 0:00

    Recycled steel works for strength but not for regulating electricity or advanced manufacturing.

  • 0:00

    Cold-rolled virgin steel is required for specific electrical applications in manufacturing.

  • 2:25

    The United States needs to roughly double the size of its industrial plant.

  • 2:25

    Recycled steel cannot be scaled quickly enough to meet the demand for doubling industrial capacity.

  • 2:25

    Importing steel allows for immediate increases in volume without a ten-year buildout.

  • 2:25

    A 25% tariff on imports raises costs while decreasing the flow of needed input materials.

  • 3:19

    The United States lacks domestic bauxite raw materials required for virgin aluminum production.

  • 4:07

    High-end manufacturing like airplanes requires virgin aluminum that the U.S. does not smelt enough of itself.

  • 4:07

    Policies raise costs and lower supplies before domestic capacity is built out.

  • 4:07

    Construction and residential real estate face the most severe slowdowns due to these policies.

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