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Trump’s appearance in Western Pennsylvania on Friday was supposed to be an announcement that US Steel is staying open as he is approving the sale of the company to Nippon Steel.
There were lots of cheers and Trump’s usual mix of lies, exaggerations, and false promises, but whether or not the people in the audience realized it at the time, Trump also announced a move that could kill their jobs.
Trump said:
We are going to be imposing a 25% increase. We’re going to bring it from 25% to 50%, the tariffs on steel into the United States of America, which will even further secure the steel industry in the United States. Nobody’s gonna get around that, so we’re bringing it up.
From 25%, we’re doubling it to 50%. And that’s a loophole. And by the way, I have to tell you, I believe that this group of people that just made this investments right now are very happy because that means that nobody’s gonna be able to steal your industry. It’s uh, at 25% they can sort of get over that fence at 50%.
They can no longer get over the fence.
The problem is that Trump’s tariffs will increase the price of steel when it is not possible for the US to meet domestic demand with domestic production.
According to an EIU analysis:
It is highly unlikely that local production can increase sufficiently to fully replace net imports in the short to medium term. Some of the largest US steelmakers—including Nucor, Steel Dynamics and US Steel—are expanding capacity.
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However, the expansions in progress amount to only a small proportion of the country’s net imports. Domestic capacity utilisation rates did not rise above about 85%, even when steel prices surged to all-time record highs (almost three times higher than today) in late 2021, against recent operating rates of about 75%, according to the American Iron and Steel Institute. Moreover, there are mismatches between the type of steel products imported and domestic production line.
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In the longer term, we do not expect higher effective US tariff rates on steel on their own to boost domestic production or encourage a renaissance in US manufacturing.
Higher steel prices means less steel being used. Less steel being used means less work for steelworkers, which equals layoffs and job losses.
Basically, Trump came to Western Pennsylvania to announce that his tariff policies could kill the jobs of steelworkers.
Being that Trump always chickens out when it comes to tariffs, he could back off of it all, but if he doesn’t, those same clapping steelworkers could soon find themselves out of a job.
What do you think about Trump potentially killing steel jobs? Share your thoughts in the comments below.
