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President Donald Trump just imposed 25% tariffs on steel imports and 10% import taxes on aluminum.
Those tariffs aren't ideal – and they could lead to a trade war if Trump's team isn't careful.
But the desperate hand-wringing we're seeing from the Washington and Wall Street crowds is, frankly, unseemly.
The Associated Press says that U.S. steel production is doing just fine, because the economy is now growing at roughly 3% a year.
Trade Partnership, a pro-trade business group, predicts that the tariffs will lead to 146,000 American job losses.
And Ira Shapiro, one of the architects of the North American Free Trade Agreement, told CNBC that President Trump "has done incredible damage to our relationship with Mexico, some to Canada and a lot to the European Union, all of which was not necessary and not desirable."
There's a problem here. All this nay-saying presents a simplistic – and I would say false – narrative.
According to MarketLine, steel will be an $865 billion global industry by 2020. And we here in the United States are missing out… almost entirely. Of the world's top 12 steel producers, only one is U.S.-based.
So if we do this the right way – if Trump's seemingly reckless plan gets everyone rushing to the negotiating table – domestic firms will clearly benefit.
That said, Trump's tariffs are far from a panacea.
The steel industry is a laggard in part because it hasn't kept up with the times. And so steelmakers and other metal firms must invest in the innovative digital tech that is transforming so many other industries.
I'm talking about a technology that unites hardware, software, sensors, robotic systems, and more so that steel factories can operate far more profitably.
Today, factory-floor automation technology is worth roughly $109 billion. MarketsandMarkets says that spending in the sector will swell to $153 billion by 2022.
The firm I want to show you today is transforming steel companies – and firms in other hidebound industries – into advanced tech players.
It's minting cash for its shareholders along the way.
And it's about to start a second $1 billion share buyback program – so you'll get paid as you wait for your gains…
From Goat to Hero
To understand what's happened to domestic output, we need to unwind the clock by 45 years. Frank Giarratani, an economist at the University of Pittsburgh, says U.S. steel production peaked in 1973 at 137 million metric tons.
Last year, according to data compiled by Statista, that figure stood at just 82 million metric tons. That's a 40% decline during a period in which real GDP more than tripled to $17.3 trillion.
And while the quality of U.S. steel has improved dramatically, the industry is still well behind China, which is now the world leader in steel, accounting for nearly half of all output. It now makes more steel than all of North America and the European Union combined.
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In fact, China makes too much steel. To cope with overcapacity, the Chinese steel industry is actually laying off some 1.8 million workers and selling steel around the world at sharply reduced prices.
Now here's what I see happening…
The tariffs will encourage China to accelerate its reduction in overcapacity.
Not only that, but they'll help solve a much bigger problem – Beijing's theft, via the Peoples Liberation Army of cyber thieves, of American technology. These tariffs are going to help "persuade" Beijing to stop that practice as well.
If things go that way, Trump will look like a hero – not the goat the mainstream media is portraying him as.
But like I said, steelmakers still need some high-tech help – tariffs or no tariffs.
About the Author
Michael A. Robinson is a 36-year Silicon Valley veteran and one of the top technology financial analysts working today. That's because, as a consultant, senior adviser, and board member for Silicon Valley venture capital firms, Michael enjoys privileged access to pioneering CEOs, scientists, and high-profile players. And he brings this entire world of Silicon Valley "insiders" right to you...
- He was one of five people involved in early meetings for the $160 billion "cloud" computing phenomenon.
- He was there as Lee Iacocca and Roger Smith, the CEOs of Chrysler and GM, led the robotics revolution that saved the U.S. automotive industry.
- As cyber-security was becoming a focus of national security, Michael was with Dave DeWalt, the CEO of McAfee, right before Intel acquired his company for $7.8 billion.
This all means the entire world is constantly seeking Michael's insight.
In addition to being a regular guest and panelist on CNBC and Fox Business, he is also a Pulitzer Prize-nominated writer and reporter. His first book Overdrawn: The Bailout of American Savings warned people about the coming financial collapse - years before the word "bailout" became a household word.
Silicon Valley defense publications vie for his analysis. He's worked for Defense Media Network and Signal Magazine, as well as The New York Times, American Enterprise, and The Wall Street Journal.
Michael is 100% independent and receives absolutely no compensation from companies he writes about. His ideas are completely his own.
So, it probably goes without saying that you won't ever be left in the dark about breaking innovations, ahead-of-their-time technologies, and breakout companies on the cusp of changing the world once you join this world.