There have been reports of several layoffs in the US steel industry this year, in contrast to last year’s news of plant restarts and new plants. Last year, Section 232 tariffs lifted steel prices, which are currently hovering near multiyear lows and triggering plant closures and job losses.
US steel industry and Trump’s tariffs
The US steel industry has stayed in the headlines since Donald Trump’s election three years back. His election triggered a buying spree in stocks such as U.S. Steel Corporation (X), AK Steel (AKS), and Cleveland-Cliffs (CLF). Keeping his word, Trump imposed a 25% tariff on steel imports last year, resulting in US steel prices surging to a decade high in the year’s first half. Falling imports and higher prices triggered an increase in domestic production as well. As cash flow and profitability increased, domestic mills announced new projects and the restart of some idled mills. U.S. Steel Corporation, for instance, restarted two blast furnaces that were idled in 2015. New mills and restarts meant new jobs in the US manufacturing sector.
Things come full circle
Fast forward to this year, and the steel industry is still in the news, but for other reasons. There have been several plant closures and layoffs. Earlier this year, X closed two of its US blast furnaces, AKS permanently closed its Ashland Works facility, and ArcelorMittal (MT) idled its tin mill plants. Domestic steel prices plunged to multiyear lows despite Trump’s Section 232 tariffs.
The new wave of layoffs in the US steel industry
We’re now seeing a fresh wave of layoffs in the steel industry. Last week, U.S. Steel Corporation confirmed it is laying off some employees. The Pittsburg Post-Gazette reported the company said, “We need to truly become a leaner, more efficient organization faster.” It added, “As part of this process, we are taking the difficult step to eliminate a number of non-represented positions in the United States.” However, the company hasn’t revealed how many employees would be laid off as part of its restructuring.
Layoffs despite Trump’s tariffs
Argus Media reports ArcelorMittal will be idling one of its blast furnaces at Indiana Harbor. Typically, such idling is followed by layoffs, especially considering that steel demand is modest at best. Also, with new capacity set to come online in the next decade, some idled blast furnaces might be permanently closed. AK Steel’s Ashland Works plant is a perfect example. The company permanently closed the plant based on its assessment of the long-term demand-supply situation.
Meanwhile, layoffs in the US steel industry have put Trump’s Section 232 tariffs in the limelight. The tariffs were supposed to turn around US steel companies’ fortunes, but that’s not exactly the case, as falling prices and job losses reflect. Incidentally, George Bush also tried his luck with steel tariffs in his tenure. Eventually, he had to roll them back. Could Trump’s tariffs meet the same fate? For more insights, read Will Trump’s Steel Tariffs Fail Like Bush’s Tariffs?