|
|
|
|
Why are basic material industries suffering despite government help?
(Note: companies that
could be impacted by the content of this article are listed at the base of the
story [desktop version]. This article uses third-party references to provide a
bullish, bearish, and balanced point of view; sources are listed after the
Balanced section.)
In the 2016 election, President Trump ran on a platform of bringing back basic material industries such as coal, energy, and steel. He followed up on his pledges by loosening environmental restrictions and placing tariffs on imports. Specifically, the Trump administration reversed Obama’s Clean Power Plan that would have shifted power generation from coal to natural gas. The administration opened additional federal land for drilling, approved new oil and gas pipelines and rolled back automotive fuel economy (CAFÉ) standards in order to help the energy industry. The administration enacted a 25% tariff on steel imports from all countries except for Canada and Mexico to bring back jobs to steelworkers. Now, after some initial success, these core industries are reporting lower profits, stock prices are down, and employment levels are falling. Do the president’s actions represent an investment in this country’s future that will eventually pay off (Bull Case)? Or, have the president’s actions backfired (Bear Case)?