U.S. Steel announced it will temporarily halt production at two domestic plants despite the boost from the Trump administration’s tariffs, as a steel industry singled out for federal support shows signs of weakening.
The closure runs in sharp contrast to the narrative President Trump has offered about the steel industry. Tuesday night in Orlando, as he formally announced he was running for reelection, Trump boasted about helping the steel industry through the use of tariffs on imports.
“Thanks to our tariffs, American steel mills are roaring back to life, you know that,” he said.
The moves come amid broader concerns about a slowdown in the steel industry, which threatens to derail a key economic priority of the Trump administration. Despite initially surging under the tariffs, steel prices have fallen dramatically amid weakening demand from key consumers, including the auto, energy and agricultural industries, said Phil Gibbs, a steel industry analyst at KeyBanc Capital Markets.
Prices of hot-rolled coil — a key metric — have fallen from their peak last year of $900 a short ton to less than $600 a short ton, said James Moss, a steel industry consultant at First River Consulting, based in Pittsburgh.
“At the moment, the market is a little sideways,” Moss said.
Last year, Trump imposed tariffs of 25 percent on steel imports and 10 percent on aluminum imports, citing national security concerns. The tariffs remain in effect for China and most countries, although they have been curbed in a limited number of exceptions, such as for Canada and Mexico.
Trump’s tariffs helped the steel industry’s resurgence in 2017 and 2018, leading to soaring profits and company plans to restart old plants. Amid the favorable business climate, contract negotiations last year led U.S. Steel workers to receive their biggest pay increases in years.
Trump celebrated the steel industry’s improvement under his administration, calling it a key success story of his tariffs. Last month, he tweeted that “in one year Tariffs have rebuilt our Steel Industry — it is booming! . . . we now have a big and growing industry.”
But steel prices have since fallen dramatically from 2018 to 2019, in part because of weakening demand across Europe as well as weakening demand in the United States. ArcelorMittal also announced last month it will be idling steel mills in Europe.
Trump’s steel tariffs may help curb the competition facing American steel producers in domestic markets, but Chinese steel can still help drive down prices in Europe and in other competitive markets, industry analysts say.
“It can still show up in multiple different places, and not necessarily with the ‘China’ brand on it,” Moss said. “There’s a supply component of this which has not gone away, despite the tariffs. ”
Trump’s steel tariffs are costing U.S. consumers and businesses more than $900,000 a year for every job created, according to a report by the Peterson Institute for International Economics, a think tank that supports free market policies.