The Spark

“The emancipation of the working class will only be achieved by the working class itself.” — Karl Marx

Steel Tariffs, Job Cuts and Plant Closings

Nov 25, 2019

It is not a surprise that many steel workers thought, when Trump slapped 25% tariffs on foreign steel in March 2018, that tariffs would increase the number of jobs in steel by keeping out imports. For decades, workers had been told that the loss of jobs in steel was due to foreign imports. Company executives, politicians, economists and union officials all said it. It was a unanimous verdict. No one questioned it.

And it was a great big lie.

Trump’s Tariffs

After Trump’s dramatic increase in tariffs, the big steel manufacturers in this country cashed in. They boosted steel prices by more than 40%, and the share price of their stock shot sky high. But steel production hardly increased, and few new jobs opened up.

By the beginning of 2019, because of a global economic slowdown in manufacturing, some big steel buyers cut their orders. So, steel prices plunged, as did the price of the shares of steel company stock. This set the stage for steel companies to slash “costs,” that is, cut jobs, close plants, etc.

In June, U.S. Steel announced it was laying off 200 workers at two blast furnaces, near Detroit and in East Chicago, Indiana. Other steelmakers announced closing mills, laying off workers and cutting back hours, in Louisiana, Kentucky, West Virginia and Pennsylvania.

This wasn’t supposed to happen. As Brenda Deborde of Ashland, Kentucky, a steel worker who had recently gotten her layoff notice, told the Washington Post (October 25), “We really thought the tariffs were going to turn us around—that things would go back to being the way it was.”

Behind the Massive Job Losses

For close to half a century, between 1962 and 2005, 400,000 jobs were eliminated or destroyed in the steel industry. That was 75% of the work force—gone!

Those jobs weren’t destroyed by waves of imported steel, because U.S. steel production didn’t decline in that period. The same amount of steel was produced by 75% fewer workers. In 2005, as much steel was being produced in this country as in 1962—according to a recent study published in the American Economic Review. That meant that all those jobs had been stolen by the big steel companies in this country. The more steel each worker produced, the more steel companies cut workers’ jobs.

When the 2008–2009 global recession hit, it was a true catastrophe in the steel industry. Production fell by almost half. Ever since, steel production has only partially recovered. The main reason is the relatively weak recovery in manufacturing, construction and capital goods—the big customers for steel.

So, in order to increase their profits, despite the weak recovery, the steel companies again cut jobs. Thus, in 2018, companies produced the same amount of steel in the U.S. as they did in 2011—this time with a workforce that was another 10% smaller! These companies had managed to squeeze the same amount of production out of 10,000 fewer workers.

Meanwhile, the loss in jobs was blamed on steel imports, especially from China. No, the problems for steel workers were not caused by imports—but by the insane workings of the capitalist system, which drives more workers into poverty, even as the workers produce ever more wealth.