CHICAGO (Reuters) – President Donald Trump promised a new dawn for the struggling US steel industry in 2016, and the greed for new jobs in Midwestern states, including Michigan, helped lead him to a surprise electoral victory.
Four years later, Great Lakes Works – once one of the state’s largest steel plants – has shut down the steelmaking operation and laid off 1,250 workers. A year before the June layoff, plant owner United States Steel Corp planned to invest $ 600 million in the upgrade amid deteriorating market conditions.
Trump’s strategy was focused on protecting American 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 tariffs in higher steel prices resulted in increased demand from the Michigan-based American auto industry and other steel consumers. And the Trump administration has never followed the infrastructure plan.
Michigan’s heavy reliance on the steel and auto industries puts Trump’s trade policy in sharp focus ahead of the November 3 presidential election on this battlefield. Democrats say their goal was to recapture the votes of blue-collar activists who had lost to Trump four years earlier – a major factor in their victory over Hillary Clinton. Trump won Michigan by less than one percent of the statewide total vote. Political analysts say that often contests of votes from unionized construction workers – who have historically held Democratic votes – will take place fiercely in the battleground states of Wisconsin and Pennsylvania.
Biden leads Trump in Michigan with 8 percentage points, widening his leadership from a few weeks ago, according to a Reuters / Ipsos state opinion poll of potential voters held from Seapate 29 – Oct. 6.
According to US Department of Labor data, before Trump took office, the steel industry has been retrenching jobs for the past year, before the macroeconomic downturn caused by the COVID-19 epidemic – and now employing 1,900 fewer workers gives. (For a graphic on steel jobs, click on tmsnrt.rs/2SRIEaF)
While the tariffs failed to boost overall steel employment, economists say they created higher costs for major steel consumers – killing jobs nationally, including Detroit-based automakers General Motors Co. and Ford Motor Co., steel and aluminum The tariffs resulted in at least 75,000 jobs causing losses to industries using the metal by the end of last year, according to a PhD analysis by Lida Cox. KD Rays, a candidate in economics at Harvard University, and a professor of economics at the University of California, Davis. In total, he estimated that there was a net loss of 175,000 American manufacturing jobs from the trade war to mid-2019.
In Michigan, steelmakers have given layoff notices to about 2,000 workers, since the tariffs 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, Trump announced a metal tariff when the state’s primary metal manufacturing industry, which includes iron and steel mills, hired about 7,300 fewer employees in August than in March 2018 did.
Michigan’s manufacturing sector has suffered job losses due to steel-industry failures, which now employ 55,100 fewer employees since Trump took office in January 2017. According to the St. Louis Fed, manufacturing jobs account for 35% of the state’s automotive industry.
Whether such figures will change swing-state voters remains to be seen. Bill Wiseman, a financial manager at the Ford manufacturing facility in Plymouth, Michigan, says Trump has done more to protect American manufacturing than any of his predecessors.
The 51-year-old Republican, who voted for Trump in 2016, said “he has tried wholeheartedly.”
Bob Kemper, chairman of the complaints committee in the Great Lakes Works Chapter of the United Steelworkers (USW) Union, accused Trump of causing job losses.
“I don’t see any policy that would help us,” said Kendra. “We are doing our shame here.”
The 1.2 million-member United Steelworkers (USW) union, which represents American manufacturing workers in many industries, supported Clinton in the last election and will return to Democrats this time again. Kemper admitted that many of his co-workers voted for Trump in 2016 but say Michigan’s steel industry’s fortunes have come down with support.
Trump promised a similar 2016 campaign to revive the ailing coal industry by reversing environmental regulations. But that industry’s employment has dropped 9% since 2016, with about 46,000, as 66 coal plants – nearly a fifth of the US total – have closed. The economic losses have occurred despite the administration’s steps, including lowering limits on carbon emissions and dumping coal waste into streams.
The Republican Party in Michigan did not respond to requests for comment. Peter Navarro, director of White House Trade and Manufacturing Policy, did not answer Reuters’ questions on job loss figures in steel and manufacturing.
When US Steel gutted Great Lakes Works, which primarily serves the automotive industry, it cited weak corporate demand, lower steel prices and a new corporate strategy to invest in more cost-efficient technology. gave. In May, Cleveland-Cliffs Inc. said it was shutting down its Hot Strip steel mill and some other operations in the Detroit area and laying off 343 workers. It cited “a rapidly deteriorating business situation.”
A Cleveland-Cliffs spokesman did not answer questions about the impact of Trump’s trade policy.
US Steel defended Trump’s tariffs. Company spokesman Meghan Cox said the policy “helps ensure America’s steelmaking capacity during this epidemic.”
The firm’s shares have fallen nearly 82% since early March 2018 – the same month Trump announced a steel tariff – with a 28% increase in the S&P 500 over the same period. US steel prices are now 33% below their peak in May 2018, but are 21% above the global market price because of tariffs – a gap that hurts the competition of American companies that produce fashion products from domestic steel Huh.
“No matter what the tariff is, you can’t sell anything when there is limited demand,” said Ned Hill, a professor of economic development at Ohio University University.
Trump said at a Pennsylvania rally in August last year – as steel companies were reeling from falling demand and prices – that their tariffs have turned “dead” business into a “thriving” enterprise.
The tariffs initially benefited companies including US Steel and Nucor by limiting competition and raising prices. At the end of 2018, American steel workers achieved cumulative 14% wage growth over a four-year period.
The tariffs also lead to investment, said Jeff Ferry, chief economist at a coalition for a prosperous America, a bipartisan trade group. He said old coal-fired plants such as Great Lakes Works were shut down due to outdated technology.
“We are not doing this to save individual jobs”, in the short term, Ferry said of the tariffs. “If you develop industries, in the long term, the headcount will increase.”
Kemper said there is little comfort to workers working from Great Lakes Works, who have found it difficult to get new jobs amid the epidemic. The twin cities of Ecorse and River Rouge – which relied heavily on tax revenue from the plant – are also causing damage, the mayors of the cities said. Ecorse used to collect $ 6 million in property taxes from the mill – or half its revenue, said Mayor Lamar Indwell, a Democrat.
Many Democrats have supported the steel tariff. The Biden campaign did not respond to a request for comment on its steel trade policy. In a USW statement in May, Biden said the steel tariff would remain in place until a global solution to limit excess production – largely in China – could be negotiated.
The USW also supports the tariffs, but says the Trump administration downplayed the policy by approving requests from American manufacturers using steel to exempt their imports – eliminating gains for domestic steel.
TARIFF HICH MICHIGAN AUTO FIRMS
Industry experts say the tariff has had a profound impact on steel consumers. General Motors, Ford and Fiat Chrysler Automobiles NV – all three have closed a plant in Michigan since January 2018, according to Kristin Digić, vice president of industry, labor and economics at the Automotive Research Center. Both General Motors and Ford reported $ 1 billion in steel cost increases in 2018.
GM declined to comment on the impact of the tariff. A Ford spokesperson said the automaker faced high raw material costs in 2018 as it buys 95% of the steel from domestic suppliers. He said that since crude steel prices have come down, Ford’s manufacturing costs still go up because of US tariffs on Chinese-made auto parts. China’s retaliatory tariffs have also cut Ford’s vehicle exports to that country.
Companies have also felt the impact of Trump’s trade policy ahead of the auto supply chain.
Jeff Azanverion, head of Michigan-based Clips and Clamps Industries, purchases steel from American mills to manufacture metal and tool parts for Japanese and Detroit-based automobile manufacturers. He said that his company had lost contracts of up to $ 3.6 million in the last two years. Competitors competing in Canada and Mexico now have an advantage, he said, because steel costs are lower in those countries.
Aznavorian said he could move some of his business overseas.
He said, “I need to live in a place where I can buy raw materials at a competitive price.”
Rajesh Kumar Singh Report; Additional reporting by Timothy Gardner; Editing by Caroline Stauffer and Brian Thevanot