Tariffs Didn't Fuel Revival for American Steel
PITTSBURGH—President Trump made good on his 2016 campaign pledge to the steel industry, slapping 25% tariffs on foreign-made steel in an effort to revive an industry that once symbolized American manufacturing might. The tariffs succeeded in pushing down steel imports and—for a short time—resulted in higher prices for domestic steelmakers. They also encouraged newer steel companies to expand operations in the South and Southwest.
Yet the tariffs haven’t produced the steelmaking renaissance and robust job growth in America’s industrial heartland that Mr. Trump promised. What’s more, the tariffs have hurt U.S. manufacturers, including those in the automotive and appliance sectors, who say the duties on steel and aluminum continue to keep their metal costs higher than what overseas competitors pay.
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Steel producers including United States Steel Corp. remain supportive of the tariffs, saying they helped secure the U.S. manufacturing base. But domestic steel producers that turn mattress-size slabs of imported steel into finished sheet steel said they are hurting. Pittsburgh-based Allegheny Technologies Inc. abandoned its stainless-steel business this summer, and NLMK USA, a division of a Russia-based steelmaker, has laid off one-quarter of the 600 employees at its Farrell, Pa., rolling mill after failing to receive Commerce Department tariff relief on slabs.
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With the expanded production, about 6,000 jobs were added to the U.S. steel industry’s workforce after tariffs started in 2018, according to the Census Bureau. By the end of 2019, though, those gains evaporated as steel demand and prices sank. Higher prices also made steel more expensive for manufacturers that buy it, leading to the loss of about 75,000 U.S. manufacturing jobs, according to a study released late last year by the Federal Reserve Board of Governors.
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Steelmakers boosted production as prices climbed. U.S. Steel restarted two blast furnaces in 2018 at its Granite City, Ill., mill that had been idle since 2015, and recalled 500 workers who were laid off when the furnaces were turned down. Steel companies rolled out plans for new mills, too. Nucor Corp. , Steel Dynamics Inc. and other companies are adding capacity for nearly 11 million tons of flat-rolled steel annually in Texas, Kentucky, Arkansas and other states... The new, highly efficient mills entering the market will put pressure on older mills in Pennsylvania, Ohio, Indiana and elsewhere in the Midwest that most need high steel prices to operate profitably. They rely on a higher-cost integrated production process that melts iron ore in blast furnaces fueled by coal.
https://www.wsj.com/articles/tariffs-didnt-fuel-revival-for-american-steel-11603877400 (subscription)