road to hell is paved with good intentions. if they were good intentions
CHICAGO(Reuters) – President Donald Trump promised a new dawn for the struggling U.S. steel industry in 2016, and the lure of new jobs in Midwestern states including Michigan helped him eke out a surprise election win.
Four years later, Great Lakes Works – once among the state’s largest steel plants – has shut down steelmaking operations and put 1,250 workers out of a job. A year before the June layoffs, plant owner United States Steel Corp called off a plan to invest $600 million in upgrades amid deteriorating market conditions.
Trump’s strategy centered on shielding U.S. steel mills from foreign competition with a 25% tariff imposed in March 2018. He also promised to boost steel demand through major investments in roads, bridges and other infrastructure.
But higher steel prices resulting from the tariffs dented demand from the Michigan-based U.S. auto industry and other steel consumers. And the Trump administration has never followed through on an infrastructure plan.
While the tariffs failed to boost overall steel employment, economists say they created higher costs for major steel consumers – killing jobs at companies including Detroit-based automakers General Motors Co and Ford Motor Co. Nationally, steel and aluminum tariffs resulted in at least 75,000 job losses in metal-using industries by the end of last year, according to an analysis by Lydia Cox, a Ph.D. candidate in economics at Harvard University, and Kadee Russ, an economics professor at the University of California, Davis. In all, they estimated, the trade war had caused a net loss of 175,000 U.S. manufacturing jobs by mid-2019.
When U.S. Steel idled Great Lakes Works, which primarily serves the automotive industry, it cited weak demand, lower steel prices and a new corporate strategy to invest in more cost-efficient technology. In May, Cleveland-Cliffs Inc said it was closing its hot strip steel mill and some other operations in the Detroit area and laying off 343 workers. It cited “rapidly deteriorating business conditions.”
The tariffs did initially benefit companies including U.S. Steel and Nucor by limiting competition and boosting prices. In late 2018, U.S. Steel workers secured a cumulative 14% wage increase over a four-year period.
The tariffs also led to investment, said Jeff Ferry, chief economist at the Coalition for a Prosperous America, a bipartisan trade group. Older coal-fired plants such as Great Lakes Works closed because of outdated technology, he said.
That’s little comfort to the workers laid off from Great Lakes Works, who have found it harder to get new jobs amid the pandemic,