

President Donald Trump has prompted numerous gains since his historic electoral victory in 2016, from job creation to economic growth. Before Tump officially declared his presidential aspirations, trade was the cornerstone of Trumponomics, and he lambasted global partners who ostensibly had taken the American people to the cleaners through the means of unfair trading practices, currency manipulations, and efforts to undermine US industry. One product his administration targeted was steel, and it applied 25% tariffs on imports from multiple countries and pledged an industrial resuscitation.
Has the president fulfilled his promise? Let’s just say that economics has reared its ugly head again.
A Dive Into the Numbers
What a difference a year makes. This bearish and sour sentiment contradicts the ebullient consensus that cronyism and protectionism were going to open new plants, rejuvenate idled ones, stimulate output, and bring back steel jobs. Industry leaders gave speeches and appeared on business news networks, telling the world that American steel just needed businesses and consumers to pay roughly $900,000 for every steel job created or saved by the tariffs.
US steel-related stocks have been tumbling since touching highs when the import levies were applied. US Steel shares plunged from a 52-week high of $38.89 to a 52-week low of $11.67, and Nucor has declined from $69.84 to $55 per share. The New York Stock Exchange’s American Steel Index has slipped 12% over the last 12 months. The VanEck Vectors Steel Exchange Traded Fund (ETF) is down 13% in the same time period. Publicly traded firms are revising downward their profit expectations amid lower-than-expected demand levels.
As William Shakespeare wrote in Macbeth, “Oh what a tangled web we weave when at first we start to deceive.”
So what the heck is happening? It is an issue of economics.
The Economics of Steel Tariffs
Then reality set in. When prices skyrocketed, domestic demand for the material reduced, primarily from businesses that rely on this component for their products.
Producers have adapted to the shifting market trends, curtailing output. The latest American Iron and Steel Institute (AISI) data suggest that overall production has fallen to its lowest level of 2019. Without enough demand, US companies contribute to the global supply glut and bring down prices even further.
Steel Talk
The worst thing about this entire ordeal is that it was anticipated by many conservatives and libertarians. You did not need to refer to the Mises Institute, economics textbooks, or the 1930s to prognosticate what was going to happen. You could have looked back to 2002 when then-President George W. Bush imposed tariffs on steel imports only to scrap those levies nine months later because they were wreaking havoc on the US economy.
The lesson from protectionism is that the country that partakes in this 19th-century practice is made worse off on net and endures the pain of net job losses.
Are steel jobs coming back? Let’s put it this way: Total payrolls will not be what they were in 1943 or 1963. The industry has changed. You do not need dozens of employees earning $65,000 a year plus benefits to produce a few tons. This might have been the personification of middle-class life during the heyday of Leave It to Beaver and Father Knows Best, but because the US economy is so dynamic, we now have a different view of what middle-class employment looks like. It isn’t operating heavy machinery, but rather it is assisting senior citizens, running restaurants, and phlebotomy.
Will US steel be great again? It already is – the sector just looks different.
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