Through the implementation of tariffs, President Donald Trump sought to make U.S. industries more competitive via protectionism policies. However, these tariffs have accelerated the decline of several of the industries they aimed to protect.
According to Bloomberg, the 25% tariff on imports of metal has had detrimental effects on U.S. Steel. The market has lost USD 5.5 Billion in market value, roughly 70% of its value.
Trump’s tariffs sought to boost domestic production of steel. However, the tariff came alongside a cooled demand for steel globally, accelerating the decline in U.S. Steel.
“Are some companies going to suffer? Absolutely. We’ll see some capacity go away, I’m sure of it,” says Nucor Chief Executive Officer John Ferriola. Trump’s tariffs have brought forth an inevitable decline for U.S. steel manufacturers. While stronger steel manufacturers are aggressively looking to grab market share, older and more costly furnaces are struggling to compete, such as those at U.S. Steel.
In shorter terms, Trump’s new legislation has directed the steel industry to push towards aggressively adding capacity without an equivalent growth in demand. Timna Tanners, an analyst at Bank of America has dubbed this situation, “Steelmageddon.”