U.S. Steel is temporary suspending operations in Michigan, laying off workers, slashing dividends, and temporarily halting stock buybacks. It is a bloodbath in Steel Town (not the city). Why? Tariffs.
When President Donald Trump introduced steel and aluminum tariffs, domestic prices went up. As time went on, demand diminished because steel-reliant companies could not afford higher costs.
So, as a result, output has gone down over the last year – and so has U.S. Steel stock by about 40 percent.
What does U.S. Commerce Secretary Wilbur Ross? Tariffs are working.
He told Bloomberg:
“There has been much more capital invested in the steel and aluminum industries. On balance, they have both added jobs. What is happening is they are rationalizing a bit their production so that they will be more competitive in the future as we continue to go forward.”
While steel jobs have increased in the age of Trump – from 80,000 to 86,000 since January 2017 – outlooks show employment will come down (all the latest data are as recent as July 2019).
This was expected, though, based on economic theory and history.
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