Trump's Tariffs Aren't Even Helping Steelmakers

Nucor's stock price is down 16 percent since August. Executives say the fourth quarter will be even worse.


Jianan Yu/REUTERS/Newscom

More than six months after the Trump administration imposed a 25 percent import tax on foreign steel, American steelmakers—the companies that should be the prime beneficiaries of the tariffs—don't seem to be winning.

Nucor, one of the largest steel manufacturers based in the U.S., has seen its stock value fall by more than 16 percent since August 1, economist Mark Perry points out. That decline has wiped out more than $3.5 billion from the company's market value, and Nucor executives told investors last week to brace for more bad news in the coming months. Meanwhile, the stock price for AK Steel Holding Corporation, an Ohio-based steelmaker, has fallen by 26 percent since August. The company's stock is now sitting near its lowest price since May 2016.

How is this possible? The steel tariffs were intended to prop up domestic steelmakers by raising the price of imported steel. Indeed, American steelmakers like Nucor were strong advocates for the tariffs and appear to have exercised significant influence over their implementation. Prices have certainly shot upward since the tariffs were announced in March, but those higher prices may be depressing demand for American steel—and general market uncertainty over the growing U.S.–China trade war could be harming steelmakers too.

"The steel stocks have been slaughtered since the tariffs went into effect," CNBC's Jim Cramer, the exuberant host of Mad Money, said on his show last week. Kramer actually apologized to his viewers for having recommended Nucor stock several months ago—assuming, as many observers did, that the tariffs would protect American steelmakers from competition and allow them to earn more. That hasn't happened because of the tariffs' unintended consequences, Kramer concluded.

"The bottom line is that even the supposed winners from tariffs aren't winning here," he said. "This is simply the wrong time in the business cycle to own a steelmaker."

President Donald Trump still seems to believe the tariffs are working, despite mounting evidence to the contrary. But no matter how many times the president brags about nonexistent new steel plants opening up, the stock market isn't lying.

Now Nucor is telling investors to prepare for the slide to continue. In a press release last week, the company said it expects earnings to decrease in 2018's fourth quarter.

Because tariffs artificially increase the cost of imported goods, the main losers from the administration's steel tariffs have been steel-consuming industries—everything from automakers (such as Ford) and manufacturers of heavy machinery (such as Caterpillar) to small companies that make beer kegs, nails, and industrial parts. Trump pitched his tariffs as a way to protect blue-collar jobs in the United States, but the decision to slap import taxes on steel was effectively a promise to protect the interests of steelmakers at the expense of thousands of other industries.

If the tariffs aren't even helping the steelmakers, surely there is no reason to continue hurting the rest.

"If this is the Protectionist-in-Chief's idea of winning," asks Perry, "what exactly would losing look like?"

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  1. “This is simply the wrong time in the business cycle to own a steelmaker.”

    Hey, at least the tariffs aren’t to blame on this one.

  2. “Trump’s Tariffs Aren’t Even Helping Steelmakers
    Nucor’s stock price is down 16 percent since August. Executives say the fourth quarter will be even worse.”

    Using stock price as a proxy for this is rarely a good idea.

    1. So sayeth the spokesman for “Libertarians For Tariffs and Protectionism,” Trump Asslicker chapter.

  3. First, as explained above, short term stock price variation is not a good measure for the overall health of the company. Second, even if it were, it being so disproves more than just that tarriffs don’t help the industries they protect. It also dispoves Reason’s claim that tariffs harm the economy any more than any other tax. If these companies are not doing well, it means people are still buying foreign steel and just paying a higher price for it, which makes it effectively a sales tax that the market accounts for.

    Beyond that, even if Nucor is doing poorly, that means that there is still a healthy market and competition for selling steel within the United States. The real danger of tariffs is that the domestic suppliers get fat and lazy and provide an inferior product becaue there is not enough competition. If it is the case that a big domestic steel producer isn’t doing so well with tarriffs, that means there is healthy competition in the market.

    Lastly, it should not have to be explained that one company doing poorly just means other companies are doing well because they are producing a better product.

    Maybe the reason staff should go to night school and take a few basic economics classes before writing on these issues. Having that degree in comparative hate studies and journalism doesn’t seem to be conducive for writing intelligent comentary on trade and economic issues.

    1. And maybe, just maybe; to avoid the tariffs someone might build their new steel plant here instead of over there. And therefore create more good-paying jobs for Americans. Which makes people more secure and thus politically and socially content. Which leads to less angry discourse and other behaviors. Which means there is less desperation for politicians to trade on to increase their scope of power. Maybe.

      And, in addition, maybe this would actually cause steel prices to decline thus benefiting consumers in the long run.

      Of course there may be a tertiary effect of a country having the ability to rely on a robust heavy industry for national security reasons but I’m sure that can be dismissed as being unimportant.

      1. to avoid the tariffs someone might build their new steel plant here instead of over there

        HAHA , that’s rich. Aren’t these temporary to get Chinese to reduce their tariffs? Whose going to sink the capital necessary to build a plant on the promise that these temporary tariffs will stay in place long enough to get your plant up and running?

        And, in addition, maybe this would actually cause steel prices to decline thus benefiting consumers in the long run.

        Obamacare for Steel !!!!!

      2. If protectionist tariffs led to prosperity, then autarky would be the world’s most successful economic system.

    2. You realize how stupid you sound when you’re simultaneously arguing against the free market and recommending economics classes to someone?

      You’re turning into a caricature. You’re trying so hard to defend trump that it is bordering on absurdity. I’m not defending the reason writers here, just pointing out that you’re on the train to kooksville.

      1. You do realize how stupid you sound when you can’t seem to grasp that someone pointing out the contradictions in the other argument is not saying one thing or another about free tade.

        I can you the arguments for free trade better than you know them or ever will know them. You just emote words like a rosery and have no idea why you support them or how economies and markets actually work. So do me a favor and comment in response to someone else. I really don’t have time for Libertarian theology.

        1. Aw the old man is getting angry again. How cute. I didn’t see that coming. Do you just sit around all day trolling Reason these days?

          Look at the tone of your recent posts. You’ve long since given up advocating for the free market. You’re so obsessed with defending trump that it borders on lunacy. I keep thinking you might be a paid troll and then I realize how likely it is you’re just some lonely old fart who craves an audience wherever you can find it. I’m just not sure why you’ve chosen to hang around libertarians.

          I’m sure you can ‘you the arguments’ but I don’t think you actually believe them. I think you have ‘liberal derangement syndrome’ and it’s causing you to chose sides in a very un-reasonable manner. I think you have plenty of time for Libertarian theology because, based on your posting history, there’s really not much else going on in your life.

          Whatever… keep defending government intervention in markets. Keep telling us how the government needs to support the domestic steel industry. Keep telling us how much you believe in the free market. I have no doubt you believe everything you’re saying, but I don’t think anyone else does.

          1. “arguing against the free market”

            I can already tell your IQ is in the double digits.

            Because I love freedom and markets, I think Trump should quadruple the tariffs.

          2. Your knowledge of economics seems to include yelling “free market” and not much else. You are just wasting my time. It is one thing not to know anything. It is quite another to take pride in it. And you seem to be proud of the fact that you have no fucking clue why you believe what you do or any idea how markets work or what the arguments for and against tarriffs are.

            Your parthetic. There is no other way to put it. And there is no one who should be held in more contempt than someone like you who knows nothign and likes it that way.

            1. You guys can try to justify tariffs and government manipulation all you want. Just call it what it is. I guess it makes you feel better to call it freedom? I should be glad that you still assign some value to the term, even though you don’t seem to know what it means.

              free mar?ket
              /??fr? ?m?rk?t/
              noun: free market; plural noun: free markets; modifier noun: free-market

              an economic system in which prices are determined by unrestricted competition between privately owned businesses.

              Seems pretty straightforward. Maybe you can enlighten me by explaining why you think the government needs to waste my resources by propping up a poorly performing domestic industry? Are you happy that the government takes your money and plays favorites?

              1. I am happy when our government “plays favorites” by favoring America the home of liberty over Communist China. Our government, which is supposed to be of the people, by the people, and for the people.

                Unfortunately, that is all too rare. Instead our government has sold out its people for profit and political expediency and globalist ideology, and in the process enabled a Communist superpower poised to dominate the globe.

                1. Okay well you’re on a libertarian news site so nobody gives a shit that you want the government to subsidize domestic industry.

                  Half the commenters here come here to disagree with libertarian tenants in favor of some bigoted trust fund baby who doesn’t use big, confusing words.

                  1. I don’t want the government to subsidize domestic industry. I just don’t want them to permit other countries who subsidize theirs to trade with us on a very uneven playing field, especially when that country is a global Communist menace.

                    Any realist who truly loves liberty would feel the same.

          3. Those trying to defend the tariffs falter because their heart isn’t in it. They don’t care about the tariffs, know protectionism is wrong. But they must defend Trump’s mistakes because the main issue for them is the bigotry.

            1. Bingo.

    3. This. I was just astounded at how bad this “reporting” was. And they cited the unhinged neocons at AEI.

    4. Ever read the Broken Window fallacy?

      Protectionist tariffs are the broken window in that story. Just as the economic activity from fixing the broken window is seen while the opportunity cost of what that money could have been spent on is unseen, the economic activity from protectionist tariffs is seen while the opportunity cost of the money spent on more expensive goods is unseen.

      Just as the guy who broke the window pats himself on the back to congratulate himself for all the wealth he thinks he created from destroying a window, protectionists like you pat yourselves on the back to congratulate yourselves for all the wealth you think you create by making people pay more for stuff.

      Go take some economics lessons. Start with Bastiat.

      1. Protectionist tariffs are the broken window in that story. Just as the economic activity from fixing the broken window is seen while the opportunity cost of what that money could have been spent on is unseen, the economic activity from protectionist tariffs is seen while the opportunity cost of the money spent on more expensive goods is unseen.

        That is just complete fucking nonsense. Tarriffs are a tax on foreign goods. They are no more broken windows fallacy than any other tax.

        You just give the same tiresome bullshit and you seem incapable of understandign your own arguments much less any one else’s.

        1. Protectionist tariffs encourage domestic production of that which can be produced more efficiently elsewhere. They are a tax on comparative advantage. That unrealized comparative advantage is the opportunity cost in the Broken Window fallacy.

          Your allegiance to your Republican Party and its leader are blinding you to what economists have been saying for two and a half centuries.

        2. Yet today protectionism is being used by some American politicians as a cheap form of nationalism, a fig leaf for those unwilling to maintain America’s military strength and who lack the resolve to stand up to real enemies ? countries that would use violence against us or our allies. Our peaceful trading partners are not our enemies; they are our allies. We should beware of the demagogues who are ready to declare a trade war against our friends ? weakening our economy, our national security, and the entire free world ? all while cynically waving the American flag. The expansion of the international economy is not a foreign invasion; it is an American triumph, one we worked hard to achieve, and something central to our vision of a peaceful and prosperous world of freedom.

          The Patron Saint of Conservatism

        3. Conservative Jesus said that if you tax something you get less of it. When you tax cheap imports, then domestic energy is spent in producing what could be acquired more cheaply elsewhere. So what is really being taxed is energy that could be spent on producing things that are actually more expensive to import. Protectionism is a tax on comparative advantage, and when you tax something, as Conservative Jesus said, you get less of it.

          1. I would have no problem saying that history has proven Reagan wrong, if that were the case. But in context I suspect his words are reasonable. Nobody is looking to stop the expansion of the international economy, but rather to achieve reasonably fair and reciprocal trade deals. Anything less amounts to the wanton destruction of the American middle and working classes for the sake of some sort of ideology — generally, a redistributionist globalist ideology. And also to protect key national security industries, and more broadly, to stem the abusive anti-market practices of Communist China that enable its rise to economic and military dominance that threatens liberty around the globe.

  4. “That hasn’t happened because of the tariffs’ unintended consequences, Kramer concluded.”

    Not being snarky, but what unintended consequences are affecting the price of steel?

    1. The consequences that tariffs always have. Just as minimum wage laws always have the same effect, rent control always has the same effect, anti-gouging laws always have the same effect, and all other attempts at defeating supply and demand always have reliably repeatable effects.

      That those effects are never intended doesn’t wish them away.

      1. I’m sure there are tons of unintended consequences from tariffs. Making steel more expensive makes everything made with steel more expensive, etc. I’m asking what unintended consequences from the steel tariff are affecting the steel industry.

        1. You’re seeing them. It’s the same thing: unintended does not mean unforeseen.

    2. They have no idea what they’re talking about, so they just chalked it up to “general market uncertainty” supposedly caused by tariffs, and speculated that “higher prices may be depressing demand for American steel”, without bothering to research whether that was actually true. Steel demand is probably up, not down.

      And there are plenty of other potential reasons for a stock dip. I note that the stock is still up over 10% since the election. Most likely a lot of dumb money parked in steel stocks after the election thinking it would be a clever play. Also someone mentioned below they had a big devaluation of O&G.

  5. Drumpf done broked the steel.

    But as a negotiating tactic for trade deals haven’t tariffs had some success?

    1. About the same as threatening to shoot yourself in the foot if the McD clerk doesn’t fix the wrong price she just entered. It may well work, in the short term, but the predicted consequence will make the long term unwelcome, and your intentions won’t make any difference.

      1. No, it’s more like threatening to walk away from a business deal because the terms are unfair and could be better, even though you would stand to make some money under the offered terms. Perfectly normal and happens all the time.

        1. No, it is like shooting yourself in the foot as a threat, because that’s what tariffs are, taxes on your own people because you hope the lesser consequences of reduced sales will influence the other country.

            1. It’s bunk. Unilateral free trade is not as good as overall free trade, but it’s sure better than a tariff war. If you can’t see how tariffs hurt the natives more than the “enemy”, you don’t understand tariffs or taxes.

              You are also a collectivist if you think it is any of the government’s business to control who you do business with in the name of the greater good.

        2. No. It really is like threatening to hurt yourself if someone else doesn’t do something. because tariffs affect your own people more than foreigners.

          1. But they don’t always… The fact is, the average American will feel FAR less pain if we were to go hard core against China, than they would feel from us doing it. We could still import cheap shit from EVERY other country in the world… But they’d have nobody to replace us.

            This is what leverage is all about. We have it, they don’t. Which is why if Trump REALLY wants to push it, we can get them to crack.

            That you don’t understand the concept of suffering a little bit in the short term, for a FAR larger long term gain is ridiculous. If China opens up to international competition, the US will probably bring in TRILLIONS in extra income over a decade or so. Well worth a few billion bucks in temporary issues.

  6. Here’s the deal: Hillary, against all expectations, lost, and the anti-Hillary crowd was so ecstatic that they forgot how awful Trump was in so many ways, and latched on to him. Same as the 1930s anti-communists latched on to Hitler, and same as the anti-cronyists of the late 1800s and early 1900s latched on to Lenin and Stalin.

    Sure, compared to the Tsar, Lenin had some good points. Hitler had his good points, compared to Stalin. Mao had some good points compared to the feuding warlords and nationalists. Trump has good points, compared to Hillary, and especially compared to Bernie and his ilk.

    But these fresh converts forget that the world is not black and white, and just because the winner has some good points doesn’t mean they have to pretend even to themselves that all his policies are good. They fool themselves into replacing their principles with a new temporary principal. It’s so much easier in the flush of excitement over the worse guy losing.

    1. The economy is just a complete disaster what with over 3% growth, rising wages and historicly low unemployment.

      1. John-the-short-term-thinker. I see why you didn’t sign up as Jonathon-the-long-term-thinker.

        1. So you’re a long term thinker?
          I’ve been asking this for a while: what are the long term effects of the US depending on foreign steel production and encouraging domestic manufacturing to relocate overseas?

          1. US manufacturing has been climbing steadily, in dollars. Manufacturing jobs have been shrinking steadily since a 1943 peak. If you see the number of jobs as important, then you’d probably really like it if the country went back to 90% agricultural jobs.

            You apparently know nothing of comparative advantage and economics in general. I suggest starting with Henry Hazlitt’s Economics in One Lesson, which is a book, not a pamphlet (the name can be misleading). He’s a clear writer and the subject is a lot simpler than most people imagine.

            1. We also would have millions more jobs if we hadn’t outsourced as much manufacturing as we have…

              Funny thing too, Japan and Germany, the next most successful 1st world nations, both have about DOUBLE the % of their workforce working in manufacturing still. And fewer working in low wage service industry jobs… Interesting even sketchy borderline 2nd world nations like Italy and Greece actually have stronger manufacturing sectors than the USA.

              That is ALL because of our particular policies. I’m sorry if I think it’s a bit ridiculous that GREECE has a stronger industrial base than the USA does.

              It’s all gonna be fun and games until the US is too deep in debt, and we lose the reserve currency status, our currency plummets in value, and we CAN’T import all our cheap shit anymore… But you would have already thought of that right? Being a long term thinker and all. LOL

  7. Nucor just wrote off a big devaluation of its gas and oil reserves. They own these as a hedge against any future price increase. It is not cash just an accounting adjustment.

  8. A Nucor bankruptcy would be a victory for accountability, justice, reason, and the American way.

    Any Trump-supporting steelworker displaced by bankruptcy could try a truck-driving job. Robert Bowers’ employer just experienced an opening for an older white male Appalachian high school dropout ready for a sketchy over-the-road career.

    1. “I hate America.”

      1. I love America. I detest its vestigial bigots, its faux libertarians, its disaffected, uneducated right-wing losers.

  9. Prices have certainly shot upward since the tariffs were announced in March, but those higher prices may be depressing demand for American steel?and general market uncertainty over the growing U.S.?China trade war could be harming steelmakers too.

    I wonder if the preservationist environmentalists like this result.

  10. “It will generally be advantageous to lay some burden upon foreign industry, for the encouragement of domestic industry, when some particular sort of industry is necessary for the defence of the country. The defense of Great Britain, for example, depends very much upon the number of its sailors and shipping. Defense is of much more importance than opulence.”

    — Adam Smith

    1. Adam Smith was obviously a commie.

    2. I REALLY should have bookmarked a link that had a whole series of Adam Smith quotes responding to questions in an “interview” about many of these current trade issues. Basically, he was smart enough to recognize basically all the same exceptions to the rule that sane people do today. Whereas dogmatists will do anything they can to avoid issues like:

      Foreign capital accumulation at the expense of the local population (eventually leading to being surfs if deficits are big enough for long enough), what if unemployment increases (LITERALLY not even accounted for in traditional free trade theory), what if the new jobs are lower wages, what if the foreign power is doing it for strategic and nefarious purposes, the original theory was based on the assumption you had hard currencies not fiat, etc.

      I believe in real free trade… But the real world is a LOT more messy than a simple reading of classical free trade theory makes it out to be.

      1. The link you are talking about is at nationaleconomicseditorial.com

        They have lots of good analysis.

  11. Boehm with his weekly rotten cherry picking of economic bad news.

    Meanwhile, in the country as a whole, 3rd Quarter GDP up 3.5% annualized, unemployment down to 3.7%, lowest in almost 50 years!

    So much winning for America!

    So much evasion of the truth by Fake News!

    1. Boehm blabs on and on and keeps saying the sky is falling.

      Then when a perfectly normal market adjustment happens he and his cronies will say, “see. We were right, the market took a downturn”.

      Boehm works because he has not made sound investments to not have to work. He is wrong on most things about the economy.

      1. So who is going long on Nucor.

        Thinking about it.

        This is a great company. Tarrifs or not. Look what they do.

  12. You know, the Reason comments section really exemplifies the need for libertarians to divorce themselves from Republicans altogether.

    Half the commenters here seem to think a libertarian is just a right-wing fringe Republican.

    1. I don’t. But I live in the real world. I understand that there are things BEYOND simply economics. I believe libertarianism is correct 100% of the time in terms of moral principles. I think a strict reading produces the best results 98% of the time… But there IS that other 2% of the time where there are kinks in the real world that mess up the perfection of libertarianism on paper. Or something as simple as being okay with twisting somebodies arm in order to get what you want. I’m okay with this as a short to mid term thing, but I wouldn’t want it forever.

  13. Actually Trump had the right idea, just at the wrong time. He is about 40 years to late.

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