Markets

The Trump Tariff Twist That Has Cost U.S. Steel $5.6 Billion

By Matthew Townsend and Joe Deaux
July 7, 2019, 4:00 PM EDT Updated on July 8, 2019, 11:17 AM EDT

• Older mills unable to compete as output soared, demand fell
• Nucor’s cheaper-to-run electric-arc furnaces hold their own

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President Donald Trump’s tariffs on foreign steel have sped the decline of some of the U.S. mills he vowed to help. ... Exuberance over the levies dramatically boosted U.S. output just as the global economy was cooling, undercutting demand. That dropped prices, creating a stark divide between companies like Nucor Corp., that use cheaper-to-run electric-arc furnaces to recycle scrap into steel products, and those including U.S. Steel Corp., with more costly legacy blast furnaces.

Since Trump announced the tariffs 16 months ago, U.S. Steel has lost almost 70% of its market value, or $5.6 billion, and idled two American furnaces in mid-June that couldn’t be run profitably at the lowest prices since 2016. Meanwhile, Nucor, down around 20%, has touted $2.5 billion in expansion projects.

The president’s actions likely “sped up” up an unavoidable “evolution,” said Nucor Chief Executive Officer John Ferriola in an interview last month. “Are some companies are going to suffer? Absolutely. We’ll we see some capacity go away, I’m sure of it."

Last July, Trump stood on a makeshift stage at a U.S. Steel mill in Granite City, Illinois, and beamed as workers cheered the tariffs. At that point, the company had already restarted one of two blast furnaces at Granite City, and vowed the second would soon be brought online. ... “Workers are back on the job, and we’re once again pouring new American steel into the spine of our country,” Trump said during the hour-long program. “U.S. Steel is back.”
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