Free Minds & Free Markets

U.S. Steel Stock Has Dropped 57 Percent Since Trump's Tariffs Were Announced

Another sign that the tariffs aren't working. The same thing happened when Bush imposed steel tariffs in 2002.

President Donald Trump's steel tariffs were intended to prop up domestic steelmakers by raising the price of imported steel. American steelmakers were strong advocates for the tariffs and exercised significant influence over their implementation.

How's all that working out?

As Charlie Bilello, director of research for New York-based Pension Partners, pointed out on Twitter this week, U.S. Steel's stock price has collapsed by more than 50 percent since early March, when Trump announced plans to place new taxes on imported steel. Since the tariffs were officially implemented on June 1, U.S. Steel has seen its stock price fall from $37 to less than $21 at noon on Wednesday. The current price represents a 17-month low.

Stock prices are affected by a wide variety of factors, of course, and trade policy is only one of those. Still, the dramatic fall of U.S. Steel's value in the eyes of investors raises questions about the benefits of Trump's attempt to boost American steelmakers at the expense of America's steel-consuming industries, which are forced to pay higher prices due to tariffs.

In other words, if Trump is going to justify believes it is necessary to force automakers like Ford to pay $1 billion annually in tariff-related costs in order to benefit American steelmakers, shouldn't the benefits of that policy outweigh the costs?

U.S. Steel is hardly alone in seeing its stock price slide despite help from the federal government. Here's the stock prices of five major American steel producers since March 8 of this year.

Source: stock comparisonSource: stock comparison

"Of the 13 stocks in the S&P 1500 steel sub index, all but one are down year to date by an average of nearly 25 percent," Barron's notes this week, adding that the real problem facing all these companies is that "steel is very much a global market. The U.S. is 'short' steel. Even with domestic mills running at about 80% of capacity the U.S. needs to import about 30 million tons of steel."

Tariffs can't really do much to address that. Sure, artificially inflating the price of foreign steel will shift some demand towards the already-more-expensive American-made stuff, but it doesn't do anything to increase the supply of domestic steel. Despite Trump's repeated assertions (which have now earned him a "bottomless Pinocchio" from The Washington Post's fact-checkers), there are not seven or eight new steel plants being built across the country. There's not even one—unless you count U.S. Steel making some upgrades to its main facility in Gary, Indiana, but that's hardly what Trump claimed the tariffs would accomplish.

In short, American steel-consuming companies are still importing steel—they have to, because there's simply not enough made in America to meet domestic demand. But now those steel-consuming industries have to pay higher taxes to the federal government for the privilege of importing it.

This shouldn't really be a surprise, either. Here's how the stock price of U.S. Steel reacted during similar protective tariffs imposed by President George W. Bush in 2002:

Chart by Eric Boehm; Data from Yahoo Finance historical stock price trackerChart by Eric Boehm; Data from Yahoo Finance historical stock price tracker

The drop-off is not as dramatic as what we have seen this year, but it trends in the same direction and follows the same general shape: an initial boost followed by a long decline. Nine months after they were imposed, Bush repealed those steel tariffs in the face of political and economic pressure. Trump is facing some of the same, but seems more determined to stay the course.

In the meantime, if American steelmakers are the "winners" of the trade war, it's only because other American industries are losing worse.

Photo Credit: Ingram Publishing/Newscom

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  • Rev. Arthur L. Kirkland||

    U.S. Steel brought in some Republican (one from the taxpayer-draining mercenary industry) executives. That the stock is collapsing consequent to right-wing tariffs is a welcome example of political and commercial accountability and justice.

  • The Heresiarch||

    Let me look in the Team Playbook how to deal with this...ah yes: "Well if Trump didn't institute tariffs, they would have dropped 90%!" Did I do that right?

  • Leo Kovalensky II||

    The markets have TDS.

  • loveconstitution1789||

    Well, you and Boehm have TDS. That is clear.

    Symptoms: Baseless correlations. Claims without support. History of TDS.

    Prescription: Get out of the bad claim game.

  • Wise Old Fool||

    "The would have been out of business by now"

  • Leo Kovalensky II||

    Wait, you mean the government meddling in the economy has had unintended consequences? Is this the first time this has happened??

  • SQRLSY One||

    Yes, this is the FIRST time EVER, in our entire galactic cluster, that Government Almighty heavy-handed policies (of ANY kind) have had unintended consequences!

    It's just such a crying shame that this negative happenstance randomly "guano transpired" under the reign of the Orange-Haired Wonder! Such guano transpiring under the reign of such a Fine Man makes one wonder, is there perhaps no God at all? Or is Satan perhaps in charge now?

  • Leo Kovalensky II||

    What's important here is that Trump intended to create jobs, obtain free trade, and ultimately get us to Libertopia through his 24-D chess moves on trade. It's only due to the wreckers in the free market and the kulaks in China's steel manufacturers that his strategy didn't work.

  • loveconstitution1789||

    Unemployment is at an all time low even with tweeked numbers that government gives us, all our major trading partners have cracked on never agreeing to anything Trump wants, and the economy is stronger than ever.

    Trump keeps putting your King in check and you only have one position to move to.

    He could be toying with you or that could the only move you have because of your strategy.

  • John||

    US Steel isn't the only steel maker in America. The fact that its stock price is still falling just means that it is losing out to its competition. The point of the tarriff was to help American steel makers in general not save one particular company.

    If there was an award for stupid writing on the subject of international trade, Eric Boehm would retire it.

  • Leo Kovalensky II||

    "U.S. Steel is hardly alone in seeing its stock price slide despite help from the federal government. Here's the stock prices of five major American steel producers since March 8 of this year"

    Maybe you missed this part in your intelligent reading on the subject of international trade.

  • Leo Kovalensky II||

    In case you cared, aluminum is suffering too.

    Alcoa is down 38% since March
    Century Aluminum is down 57% since March

    But I'm sure Trump meant well.

  • loveconstitution1789||

    Tech went down too. That must be Trump too.

    Funny how with TDS people, Trump gets no credit for a strong economy but gets blamed for some stocks going down.

    In the winter. When building things with steel slow down.

  • Magnitogorsk||

    Watching John and lovecon try to out-retard each other in their blind worship of Trump never ceases to entertain me each morning

  • Benitacanova||

    It's weird how when the japs subsidized steel it propelled them to prosperity. What are we doing wrong?

  • BearOdinson||

    I am not a fan of tariffs at all.

    Having said that, Nucor is the US' largest steel manufacturer (11th by volume in the world as of 2017). US Steel is only the 26th biggest in the world.

    And looking at that graph the tariff had no effect on the overall trend for Nucor.

    I am not arguing for tariffs. And I am not arguing that they didn't possibly have a negative effect. It certainly doesn't seem to have had a positive effect.

    But I could easily have headlined this article:
    Largest US steel manufacturer unaffected by tariff.

  • Echospinner||

    I have shares in Nucor. It is trading around $56 down from the high of $70 a year ago. You can see from the chart that all five steel makers show the same general trend.

    How much of that is due to tarrifs or the bearish current market is hard to say but the tarrifs sure have not done anyone any favors.

    Nucor would be expected to do better with economic uncertainty because of its manufacturing methods and ability to quickly adapt to market changes which is why it is considered a safety stock by some investors.

  • fatcyst||

    Stock market is a fraud. Also libertarian doesn't mean globalism. Please get with the times.

  • Rob Misek||

    Dumbass market based economy.

    Fucking casino.

    Ask the house what you're worth.

  • fatcyst||


  • Fats of Fury||

    More fuel for the impeachment fire, someone tell Mueller steel is stalin in Russian.

  • Freelancelot||

    You go, Fats! ;-)

  • Freelancelot||

    You go, Fats! ;-)

  • Freelancelot||

    Does this "libertarian" magazine give a flying fuck about the O'Bamma administration's tariffs? Hrm? Huh? Hrm? Huh?

  • fatcyst||

    Add to that, doesn't prices dropping mean the market is working?

  • JesseAz||

    And yet production is way up in the 1 year window...


  • loveconstitution1789||

    Cheaper stock for a strong company? Great deal for Capitalists who buy stock!

    Boehm hates Libertarianism and Capitalism.

  • fatcyst||

    Oh yea, i just read his headlines and know hes an enemy to liberty and freedom.

  • buybuydandavis||

    post hoc ergo propter hoc

  • buybuydandavis||

    I find this a refreshing change from Boehm's articles arguing that tariffs are crony capitalism that enriches protected industry to the detriment of all consumers.

    Even more refreshing is how Boehm is completely contradicting his previous articles and doesn't miss a beat.

    The DoubleThink is strong with this one!

  • fatcyst||

    Every time i come to see how Reason is doing I'm completely upset with the articles. I don't recognize any authors now a days either.

  • loveconstitution1789||

    GE stock fell by over 57% over the last year.

    $17.76 on Dec 13, 2017 and $6.71 before starting bell today.

    It must be the tariffs.

    Boehm, your little TDS causation faux-pas just make you look like a fool.

  • ThomasD||

    Hey Eric,

    How much are silver stocks down over the same period?

    How about commodities as a whole?

    You might have had an argument if you had established that steel behavior was somehow divorced from the trends in the broader markets. But the sort of lazy stenography that has taken hold here at Reason sorta precludes that, doesn't it?


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