CHICAGO (Reuters) – President Donald Trump promised a new dawn for the struggling US steel industry in 2016, and the recall of new jobs in Midwestern states, including Michigan, helped him secure an election victory in surprise.
Four years later, the Great Lakes Works, once one of the largest steel mills in the state, shut down its steelmaking operations and laid off 1
Trump’s strategy centered on protecting US steel mills from foreign competition with a 25% tariff imposed in March 2018. He also promised to increase demand for steel through major investments in roads, bridges and other infrastructure.
But the higher steel prices resulting from the tariffs dented demand from the Michigan-based US auto industry and other steel consumers. And the Trump administration has never followed an infrastructure plan.
Michigan’s heavy reliance on the steel and auto industries puts Trump’s trade policy at the center of attention ahead of the November 3 presidential election in this battle state. Democrats say they are aiming to win back the blue-collar votes lost to Trump four years ago, a key factor in his victory over Hillary Clinton. Trump won Michigan with less than 1% of the total statewide vote. Competition for the votes of often unionized manufacturing workers – who have historically voted Democrats – will be equally fierce in the battleground states of Wisconsin and Pennsylvania, political analysts say.
Biden leads Trump to Michigan by 8 percentage points, according to a Reuters / Ipsos state opinion poll of likely voters conducted from September 29 to October 6, widening his lead over just a few weeks earlier.
Nationwide, the steel industry has lost jobs in the past year – from before the broader economic downturn caused by the COVID-19 pandemic – and now employs 1,900 fewer workers than when Trump took office, according to United States Department of Labor data. (For a chart on steel jobs, click tmsnrt.rs/2SRIEaF)
Although tariffs have failed to increase overall steel employment, economists say they have created higher costs for major steel consumers, killing jobs in companies including Detroit automakers General Motors Co and Ford. Motor Co. Nationally, tariffs on steel and aluminum have produced at least 75,000 job losses in metal-using industries by the end of last year, according to an analysis by Lydia Cox, a PhD student. economics candidate at Harvard University; and Kadee Russ, professor of economics at the University of California, Davis. In all, they estimated, the trade war had caused a net loss of 175,000 jobs in the United States by mid-2019.
In Michigan, steelmakers have served dismissal notices to nearly 2,000 workers since the tariff went into effect, according to a Reuters analysis of the notices steel companies filed with the state. According to data from the Federal Reserve Bank of St. Louis, the state’s main metal manufacturing industry, which includes steel mills, employed about 7,300 fewer workers in August than in March 2018, when Trump announced tariffs on metals.
The setbacks of the steel industry account for only a fraction of job losses in Michigan’s manufacturing sector, which now employs 55,100 fewer workers than when Trump took office in January 2017, data from the Department of the United States work. According to the St. Louis Fed, the state auto industry accounted for 35% of manufacturing job losses.
Whether such statistics will change the minds of voters in swinging states remains to be seen. Bill Wischman, chief financial officer of a Ford manufacturing plant in Plymouth, Michigan, says Trump has done more to protect US manufacturing than any of his predecessors.
“He made a wholehearted effort,” said Wischman, 51, a Republican who voted for Trump in 2016.
Bob Kemper, chair of the complaints committee at the Great Lakes Works section of the United Steelworkers (USW) union, blamed Trump for the loss of jobs.
“I don’t see any policies that have helped us,” said Kemper, who supports Biden. “We’re losing our damn jobs here.”
The union of 1.2 million members United Steelworkers (USW), which represents US manufacturing workers in many sectors, supported Clinton in the last election and this time will support the Democrat again. Kemper acknowledged that many of his colleagues voted for Trump in 2016, but says support has waned along with the fortunes of the Michigan steel industry.
Trump promised a similar 2016 campaign to revive the struggling coal industry by overriding environmental regulations. But that industry’s employment has dropped 9 percent since 2016, to around 46,000, as 66 coal-fired power plants – nearly a fifth of the U.S. total – have closed. The economic losses come despite the administration’s moves to ease restrictions, including carbon emission limits and dumping coal waste into streams.
The Republican Party of Michigan did not respond to requests for comment. White House Director of Trade and Manufacturing Policy Peter Navarro did not answer Reuters questions about data showing job losses in steel and manufacturing.
When the U.S. Steel blocked Great Lakes Works, which primarily serves the automotive industry, cited weak demand, lower steel prices, and a new business strategy to invest in more cost-effective technology. In May, Cleveland-Cliffs Inc said it was shutting down its hot steel plant and some other operations in the Detroit area, laying off 343 workers. He cited “rapidly deteriorating business conditions”.
A Cleveland-Cliffs spokesperson did not answer questions about the impact of Trump’s trade policy on his business.
US Steel defends Trump’s tariffs. Company spokeswoman Meghan Cox said the policy helps “ensure the strength of US steelmaking capacity during this pandemic.”
The company’s shares have plunged about 82% since early March 2018 – the month Trump announced tariffs on steel – compared to a 28% rise in the S&P 500 during the same period. Steel prices in the US are now 33% below their peak in May 2018, but remain 21% above the global market price due to tariffs, a gap that damages the competitiveness of US companies that produce. produced with national steel.
“No matter what the rate is, you can’t sell something if demand is limited,” said Ned Hill, a professor of economic development at Ohio State University.
A “FLOWERING” COMPANY
Trump said at a rally in Pennsylvania in August last year – as steel companies grappled with falling demand and prices – that his tariff transformed a “dead” business into a “thriving” business. .
The tariffs initially benefited companies including US Steel and Nucor by limiting competition and raising prices. At the end of 2018, US steel workers secured a cumulative wage increase of 14% over a four-year period.
The tariffs have also led to investment, said Jeff Ferry, chief economist of the Coalition for a Prosperous America, a bipartisan trading group. Older coal plants such as Great Lakes Works have been closed due to outdated technology, he said.
“We’re not doing this to save single jobs” in the short term, Ferry said of the tariffs. “If the sectors grow, in the long term, the workforce will grow”.
This is some comfort for workers laid off by the Great Lakes Works, who have found it harder to get new jobs amid the pandemic, Kemper said. The twin towns of Ecorse and River Rouge, which depended heavily on the power plant’s tax revenues, are also suffering, city mayors said. Ecorse collected up to $ 6 million in property taxes from the mill – or half of its income, said Mayor Lamar Indwell, a Democrat.
Many Democrats have supported tariffs on steel. The Biden campaign did not respond to a request for comment on its steel trade policy. In a statement to the USW in May, Biden said tariffs on steel will remain until a global solution can be negotiated to limit excess production, largely in China.
USW also supports tariffs, but says the Trump administration undermined the policy by accommodating the demands of US steel-using producers to exempt their imports, eliminating the domestic steel benefit.
TARIFF HITS AUTO COMPANIES IN MICHIGAN
The tariffs have had a profound impact on steel consumers, industry experts say. All three Detroit automakers – General Motors, Ford and Fiat Chrysler Automobiles NV – have closed a plant in Michigan since January 2018, according to Kristin Dziczek, vice president of industry, labor and economics at the Center for Automotive. Research. Both General Motors and Ford reported an increase in the cost of steel by $ 1 billion each in 2018.
GM declined to comment on the impact of the tariffs. A Ford spokesperson said the automaker faced higher raw material costs in 2018 because it buys 95% of its steel from domestic suppliers. While crude steel prices have since fallen, Ford’s manufacturing costs are still high due to U.S. tariffs on Chinese-made auto parts, he said. Retaliatory duties from China have also reduced Ford vehicle exports to that country.
Companies further down the automotive supply chain have also felt the impact of Trump’s trade policy.
Jeff Aznavorian, head of Michigan-based Clips & Clamps Industries, buys steel from US factories to make metal parts and tools for Japanese and Detroit automakers. He said his company has lost contracts worth up to $ 3.6 million in the past two years. Competitors manufacturing components in Canada and Mexico now have an advantage, he said, because steel costs have been lower in those countries.
Aznavorian said he could transfer some of his business overseas.
“I need to be in a place where I can buy raw materials at a competitive price,” he said.
Reportage by Rajesh Kumar Singh; additional report by Timothy Gardner; edited by Caroline Stauffer and Brian Thevenot