Rubber bands: More tension in the US-China trade war

This might sting. The Chinese government has been subsidizing its native manufacturers of rubber bands, allowing them to “dump” their stretchy wares in the US at prices nearly 30% below fair market value. This allegation—the result of a [months-long investigation]( by the US Commerce Department following a complaint by Alliance Rubber Company—is one of the latest in the Trump administration’s trade war. The report found the Chinese government has been giving financial assistance to several elastic makers. To level the playing field for American firms, the administration may soon require US buyers to pay a combined import tax of [more than 150%]( on these sneakily cheap Chinese rubber bands. That will depend on a final decision by an independent commission in mid-January, which could be impacted by the partial government shutdown. This is worth paying attention to not just for the risk of an imminent climb in US rubber band prices—which, although indeed likely, will have a minuscule impact on the economy. Rather, it tells a larger story about the White House’s trade actions, the rise and fall of a US rubber band pioneer, and what one tiny market can tell us about the evolution of American manufacturing competitiveness. It’s time to get a grip on all this. 🐦 [Tweet this!]( 🌐 [View this email on the web]( Sponsored by [Quartz Obsession] Rubber bands January 15, 2019 Oh, snap --------------------------------------------------------------- This might sting. The Chinese government has been subsidizing its native manufacturers of rubber bands, allowing them to “dump” their stretchy wares in the US at prices nearly 30% below fair market value. This allegation—the result of a [months-long investigation]( by the US Commerce Department following a complaint by Alliance Rubber Company—is one of the latest in the Trump administration’s trade war. The report found the Chinese government has been giving financial assistance to several elastic makers. To level the playing field for American firms, the administration may soon require US buyers to pay a combined import tax of [more than 150%]( on these sneakily cheap Chinese rubber bands. That will depend on a final decision by an independent commission in mid-January, which could be impacted by the partial government shutdown. This is worth paying attention to not just for the risk of an imminent climb in US rubber band prices—which, although indeed likely, will have a minuscule impact on the economy. Rather, it tells a larger story about the White House’s trade actions, the rise and fall of a US rubber band pioneer, and what one tiny market can tell us about the evolution of American manufacturing competitiveness. It’s time to get a grip on all this. 🐦 [Tweet this!]( 🌐 [View this email on the web]( Get a free trial of Quartz membership --------------------------------------------------------------- Alibaba is perhaps best known for its online shopping business, but that’s only the beginning when it comes to this fast-expanding Chinese conglomerate. Alibaba’s plan? Become the nexus and repository of data, and use it to build nothing less than an operating system for 21st-century commerce. Sign up for a free trial of Quartz membership, and explore our exclusive field guide to understand how Alibaba, in its unstoppable pursuit of growth, is remaking global business in its image. From retail to payments, transportation, entertainment, food, and more, Alibaba wants to do it all. Can it succeed? Become a Quartz member and find out. [Explore the rise of Alibaba]( AP Photo/Alan Diaz By the digits [$19.7 million:]( Value of US rubber band imports in 2017 [25%:]( Approximate share that came from China [700,000:]( Rubber trees required to supply Alliance, at two ounces of latex per day per tree [15 million:]( Pounds of rubber bands produced annually by Alliance [25 million:]( Pounds produced by Alliance in 1999 [9,032:]( Weight of the world’s largest rubber-band ball, in pounds [90%:]( Share of US-made rubber bands produced by Alliance [40%:]( Share of the US market claimed by Alliance Sponsored by Flipboard 10 for Today: No Fake News, Just Good Stories --------------------------------------------------------------- Want curated stories you can trust? Handpicked by Flipboard's editors, 10 for Today has deeply reported pieces, fascinating profiles, surprising discoveries, and so much more. It's fuel for your mind—and your next cocktail party.[10 for Today]( Charted[atlas_HkHMh4oaQ@2x] Prehistory Rising like a rubber morning-glory ball --------------------------------------------------------------- In 1839, Charles Goodyear successfully completed years of experimentation when he accidentally heated a piece of sulfur-treated rubber and [invented the process of vulcanization](. It toughened the flimsy, brittle, easily melted substance, making boots, tires, and rubber bands possible. But he wasn’t the first. Aztecs, Olmecs, and Mayans all tapped it millennia earlier for different uses. In 2010, MIT scientists [successfully replicated their process]( using mixtures of latex and morning-glory juice, producing a bouncy 50-50 [recipe for balls]( and a strong 75-25 blend appropriate for making sandals. Mesoamericans had an advantage besides the plant being native to their region: warmth. The MIT researchers had no problems imitating the recipes on-site in Central America, but their air-conditioned labs back home proved ill-suited for the process. Origin story An American empire --------------------------------------------------------------- Though there’s some evidence that factories in the northeast US were mass-producing rubber bands as [early as 1901]( the true genesis of the modern rubber band—the sort that binds everything from cilantro bunches to lobster claws—dates back to Alliance, Ohio, in 1923. That’s when a railroad worker named William Spencer got fed up with chasing his local newspaper across his neighbor’s lawn on blustery days. His job gave him access to discarded Goodyear inner tubes, which he turned into bands by hand. (You can do the same thing to make extra-strong rubber bands, using [old bike tubes]( Soon thereafter, he set up a rubber-band production factory in Ohio, with another in Hot Springs soon to follow. The Akron Beacon Journal and the Tulsa World were his [first customers](. Nearly a century later, Alliance is still family-run, and still cranking out rubber bands in Hot Springs, where Spencer relocated the company in 1944. Alliance now makes 2,200 products [sold in 55 countries worldwide]( and as of 2015, Alliance was the [planet’s biggest rubber-band manufacturer](. It is to the rubber band what Ford was to cars, or [Harley-Davidson]( was to motorcycles—and it’s now facing similar struggles. [Read the Quartz Obsession on Harley-Davidson]( Have a friend who would enjoy our Obsession with Rubber bands? [ [Forward link to a friend](mailto:?subject=Thought you'd enjoy.&body=Read this Quartz Obsession email – to the email – Giphy Explain it like I’m 5! What are rubber bands made of? --------------------------------------------------------------- Rubber comes from latex, the milky sap that oozes from cuts in rubber trees in the same way we get maple syrup. So much of it comes from Southeast Asia because of the long shadow of colonialism—the British took seeds from the Amazon to Kew Gardens in London, to colonies under the nation’s control, breaking a Brazilian monopoly. [Read the Quartz Obsession on Latex]( Brief history The rubber tiger --------------------------------------------------------------- Back in the early 1980s, [nine-tenths of rubber bands]( bought in the US were made there, too—and Alliance was among a handful of companies supplying what was then a steadily rising American demand. Eventually, the implosion of the newspaper business did deal a blow, but that was largely offset by [booming demand for fresh produce](. A much bigger hit came [from Asian competition](. Of the costs that go into making a rubber band, raw material is the biggest. Most commercial rubber comes from [Malaysia, Indonesia, Thailand, and Sri Lanka]( and producers in Thailand benefit from cheap access to rubber supplies. In 2015, Alliance won the account to provide the office-supply chain Staples’ private-label rubber bands. Staples immediately became Alliance’s biggest customer, and it built a massive warehouse to house the extra rubber it would need. In early 2017, Staples informed Alliance that it was switching to the super-cheap Thai rubber bands instead, which, according to the company’s testimony, cost half as much. The company now fears that Staples’ defection will prove to be the “tip of the iceberg” for the business-supply market. Alliance also says it’s already lost considerable business to Thai competition for the asparagus, broccoli, and green-onion band businesses. The company believes its Asian competitors’ market dominance is due to government financial support so generous that many of these companies can afford to sell rubber bands for less than it costs to make them. So in January 2018, Alliance took its concerns to the Trump administration, filing a petition for an investigation into dumping and countervailing duties. Reuters/Benoit Tessier Pop quiz Where did the name “rubber” come from? Its usefulness in erasing pencil marksThe Urdu for “sap”An ancient Mesoamerican gameThe fact that it's pleasing to the touch Correct. The 18th century polymath Joseph Priestley, who discovered soda water and oxygen, so named the substance because it could be used to rub out scribbles. Incorrect. If your inbox doesn’t support this quiz, find the solution at bottom of email. Million-dollar question Are Asian countries breaking the rubber-band rules? --------------------------------------------------------------- Alliance had reason to think their complaint would succeed. Past administrations have tended to balance trade investigations with larger geopolitical priorities, but the Trump administration has made the “strict enforcement of US trade law [its] primary focus.” And the US commerce department says the 137 new investigations into unfair trade practices are a [more than threefold increase]( from the same period during the Obama administration. Plus, there’s precedent: A 127% anti-dumping duty on Chinese paper clips initiated in 1994 [still remains in place today](. The commerce department dismissed allegations of dumping and unfair subsidies against Sri Lankan companies, while it’s withholding judgment on Thailand until next year. However, preliminary investigation reports suggest the maximum duty on imports from Thai factories is a wee [5.9% for dumping](. Meanwhile, the commerce department has so far found [minimal signs of subsidies]( benefiting Thai factories. Giphy Fun fact! When you stretch a rubber band it gains weight, [because physics](. Watch this! “My name is Joerg. I would like to take you on a strange journey to the wonderful world of rubber-based launchers.” So begins [the introductory video for The Slingshot Channel]( in which Joerg Sprave builds an [Oreo shooter]( the [“world’s first rifled slingshot,”]( a [fully automatic pencil shooter]( a [javelin thrower]( and many more wonderful and dangerous devices. Reuters/Edgar Su Poll Do you use rubber bands? [Click here to vote]( Every dayI need them occasionallyThis is the digital age Let’s talk! In yesterday’s poll about [squirrels]( 55% of you said you’ll be observing their appreciation day next week. 📧 Joseph wrote: “How dare you talk about the super powers of squirrels without mentioning the [Unbeatable Squirrel Girl]( Normally your research goes deep – but you missed it this time!” 📧 Doug said: “When you said, ‘the UK already had a native squirrel population—the red squirrel—which today is endangered thanks in part to the introduction of the invasive grey squirrel species,’ I remembered when my family moved into a house on a cattle ranch in Florida and found a pair of red squirrels in the oak tree in the yard. They were a delight but my father said they were rare and after several years they were gone. I’m wondering if red squirrels once populated the Americas and became extinct due to the grey squirrels.” American red squirrels are a different species than the Eurasian red squirrel, and they’re still common. But [they mostly live in northern regions]( (where there are conifers), so maybe the Florida ones were indeed an anomaly! 🤔 [What did you think of today’s email?](mailto:obsession%2Bfeedback@qz.com?cc=&subject=Thoughts%20about%20rubber%20bands&body=) 💡 [What should we obsess over next?](mailto:obsession%2Bideas@qz.com?cc=&subject=Obsess%20over%20this%20next.&body=) 🎲 [Show me a random Obsession]( 🎉 You asked for it! We just launched a browsable list of past Obsessions. [Dive in here.]( Today’s email was written by [Gwynn Guilford]( edited by [Whet Moser]( and produced by [Luiz Romero](. The correct answer to the quiz is Its usefulness in erasing pencil marks. Enjoying the Quartz Obsession? [Send this link]( to a friend! If you click a link to an e-commerce site and make a purchase, we may receive a small cut of the revenue, which helps support our ambitious journalism. See [here]( for more information. Not enjoying it? No worries. [Click here]( to unsubscribe. 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