The last post dealt with the unreality of finding the workers required to make it all in the U.S. President Trump almost daily continues to announce a company or nation will invest billions in production in America. According to our leader, we’re bringing back all those good-paying jobs that left our Rust Belt states in despair. However, Hyundai’s proposed steel mill in Louisiana may be the exception that proves the rule.

Since the 1970s, the U.S. steel industry, mainly in the Midwest, has been retreating. Foreign competitors used their comparative advantages to deliver quality products at better prices. The fate of U.S. Steel illustrates the decline. Once dominant, with its vast mills in places like Gary, Indiana, and Pittsburgh, Pennsylvania, it’s now a weak minor player subject to absorption by Nippon Steel.

In towns like Gary, Indiana, well-paid steel union members lived comfortable middle-class lives. Now, like their primary employer, the decline is evident. Even with ongoing government protections, U.S. Steel isn’t competitive.

So if the rule is that significant U.S. steel production isn’t competitive on the world market, why is Hyundai bucking the trend? Tariffs play a part, but they’ve only kept the industry on life support. Does Hyundai see a comparative advantage?

This plant will be an electric arc facility that will consume much reliable power. Where better to locate than a place where natural gas is plentiful? This plant highlights our comparative advantage in energy production. In the modern world, machines do the heavy lifting, requiring inexpensive, reliable energy sources. If the government doesn’t get in the way, the U.S. has an energy cost advantage over almost all other nations.

Germany has learned this the hard way. Using cheap Russian natural gas to run its industrial complex, it produced the products that made the nation a great exporter. The Ukraine war cut its Russian gas imports while it was bringing online only unreliable wind and solar to replace its nuclear plants. Germany is struggling because it’s burning coal and importing more expensive natural gas.

The mill’s proximity to the Mississippi and the Gulf is another advantage Hyundai exploits. The iron feedstock and the steel plate produced are bulky and heavy, just the sort of stuff moved cheapest by water. A consortium of community and technical schools will train prospective workers. Louisiana is a right-to-work state, allowing for innovation and flexibility.

This plant highlights how much attention a company looking to locate a plant will pay to its advantages. Because of these factors, this mill might succeed in producing products at a competitive world price. It looks well thought out, but how does imported iron ore feedstock fit in?

While Trump talks about tariff walls that will result in big profits, companies such as Hyundai look at their potential return on investment. Will its capital overall return more by investing in the U.S.? If the bottom line depends only on government actions for a better comparative return over the years, you’re betting on the whims of whoever won the last election. No one is going to bet the company on election results. It has to be profitable no matter who’s in control. According to the Wall Street Journal, President Trump has warned auto companies not to raise prices in the U.S.

Against this background, we can evaluate all these announced multi-billion-dollar investment plans. Are they new money, already committed funds, or just hypothetical? For instance, Apple made a splash, announcing 500 billion in U.S. expenditures, but a closer look shows that the plan has been in the works for a long time. Announcing intended expenditures gives Trump something to crow about and avoids his ire. Whether they happen is another thing.

I point to this plant to illustrate what it takes to bring more manufacturing to the U.S. Yet; the administration tells us we must manufacture it here. It spotlights who benefits from Trump’s auto tariffs. Only the head of the United Auto Workers lauds the move—the same union behind so much auto production moving out of the Rust Belt.

If we want to see more manufacturing here, we must enhance our advantages. Let’s see if regulations can be curbed or construed in a more business-friendly manner. For instance, knowing the actual cost of nuclear power is impossible because regulations make up so much of the price. We need access to all sorts of minerals. Most of them are available in our country or once-friendly countries. What China does is process most of the world’s minerals. We don’t mine or process much here because red tape makes it difficult, or if not impossible. Significant regulation and permitting changes must come first if you want to do stuff at home. Until we do this, supply lines will run elsewhere.

There are some solid reasons for producing some things at home. Mostly, these have to do with national security, but does it matter to our security if steel comes from our friend and ally Canada or Louisiana? Under the trade treaty negotiated by Trump in his first term, it intertwines North American economies. Now, he doesn’t like his handiwork.

I can’t understand the necessity of slamming everybody with high tariffs before we sort out and streamline our regulations. Given the size of our market and the richness of our resources, the right regulatory climate might reveal the profitability of investing in U.S. production even without tariffs or other government incentives.

The administration got the horse before the cart. Trump just ordered his administration to expedite mining projects on federal lands. Already, opponents such as the Sierra Club are lining up. It’s better to have his majority in Congress to overhaul permitting and lessen red tape. Even many on the left realize the need for reform. Once investors here and abroad know the new ground rules, they can make realistic decisions. The U.S. can only look more attractive.

For example, we will use double the amount of copper in the future. Arizona has several large mining projects pending, one of which has been ongoing for decades. They need an O.K. to start production, and the same reformed process will bring smelters to complete all-American copper.

The funny thing is that even with high tariffs, we still won’t have more domestic copper, but if we get the reforms, we don’t need the tariffs.

Plenty of projects are slow-walking or stalled and require reasonable reforms that we can bring online without tariffs or subsidies. It just requires common-sense rules people can follow to mine, build, or manufacture here.

In my next post, I’ll propose some ideas to embody in the reforms.