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The tide is starting to turn on one of Trump's favorite industries

Updated 7:31 AM ET, Fri August 23, 2019

Washington (CNN) - The tide is starting to turn on one of President Donald Trump's favorite industries: Steel.

In Michigan, US Steel is temporarily laying off about 200 workers at a plant just outside Detroit. In western Pennsylvania, 78 people are about to lose their jobs when the Akers National Roll Company closes by the end of September and between 80 to 100 workers could be laid off from at an NLMK-owned plant outside of Pittsburgh.

Steel industry jobs are heavily concentrated in swing states that were key to Trump's victory in 2016.

Between Pennsylvania, where Trump won in 2016 by a small margin, and Ohio, where he turned an Obama state red, there are about 19,400 jobs at steel and iron mills, according to data from the Federal Reserve Bank of St. Louis.

And Trump has made reviving American manufacturing, and specifically steel, a centerpiece of his presidency.

Just last week, Trump went to Pennsylvania for the 13th time since his inauguration, boasting what he says is a revival of the US steel industry thanks to tariffs he imposed last year.

"Pennsylvania steel raised the skyscrapers that built our cities. Steel was dead, your business was dead. I don't want to be overly crude, your business was dead. I put a little thing called a 25% tariff on all the dumped steel, now your business is thriving," he said, speaking at a petrochemical plant.

Administration officials argue that the steel industry needs protection because it is vital to national security. Steel producers have long argued that other countries like China have dumped unfairly priced steel into the US market.

"Our steel industry is essential to our national security and the President has shown he will not sit idly by and watch unfair practices threaten our safety and security," deputy White House press secretary Judd Deere said in a statement to CNN.

"Because of the President's fight for a fair and reciprocal playing field, steel companies are expanding operations and attracting new workers," he added.

It's true that the industry got a boost from the tariffs initially. The price of US-made steel jumped and production in the United States grew. Producers announced they were restarting a handful of mills, expanding existing plants, and had plans to build new ones.

The Trump campaign says that's a success.

"Under President Trump, US steel is finally making a comeback," said Kayleigh McEnany, national press secretary for the President's 2020 campaign, in a statement provided to CNN.

"Thanks to President Trump, US steel production was up 6% last year and is up 4.5% so far this year. Steel workers have seen their paychecks increase by 14% — the highest increase in six years," she added.

Last year, the United Steelworkers union did negotiate a new contract with US Steel that included a 14% raise over four years. The workers had agreed to a wage freeze in the previous contract.

And the industry added about 5,000 jobs in the year after the tariffs went into place, about 1,000 more than it did during the same time period a year earlier, according to data from the Bureau of Labor Statistics.

But there are other signs the industry is slowing amid softening global demand. About 1,600 jobs were created during the first six months of this year, compared to 2,800 during the last six months of 2018.

US Steel cut its earnings outlook earlier this year and has plans to reduce production at another plant in Indiana. Its shares are down 60% over the past year. Other big steel companies like Nucor and Steel Dynamics are forecasting lower profits, too.

"I think it's a harbinger. Despite Trump's best efforts, the next year isn't looking too bright for the steel industry," said Gary Hufbauer, a senior fellow at the Peterson Institute for International Economics.

There are a few factors contributing to the industry's troubles. Business uncertainty, fueled by Trump's trade war, has slowed investment. A weakening global economy and growing anxiety about a US recession in the United States are a drag on the industry, Hufbauer said.

There are indications that things are slowing among the broader manufacturing sector as well, as tariffs raise the price for some component products needed to make items like sneakers and bicycles in the United States.

A key manufacturing sector index released Thursday hit a 119-month low Thursday, indicating that the industry shrunk for the first time since September 2009.

Additionally, jobless claims are up in key manufacturing states since the Trump administration put tariffs on a wide ranging list of about $250 billion of Chinese-made goods last fall, according to a recent BofA Merrill Lynch Global Research report.

While there was accelerated growth in manufacturing jobs during Trump's first two years, economists are skeptical of describing it as a comeback.

In Ohio, Wisconsin and Pennsylvania, for example, the number of manufacturing jobs are well off their 1990s peak and still haven't recovered to their pre-2008 levels.

"It's more of a stabilization than a comeback," Hufbauer said.


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