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Why U.S. Steel, a showcase for Trump's tariffs, is laying off workers in Michigan

U.S. Steel temporarily laying off workers
  • U.S. Steel said it is laying off about 200 workers at a Michigan factory, citing a "multitude of factors" including demand, import volume and lower steel prices.
  • The temporary job cuts may last longer than six months.
  • The layoffs come after U.S. Steel said in June it planned to idle two furnaces, at Michigan's Great Lakes Works plant and Gary Works in Indiana, where it doesn't expect any layoffs.

U.S. Steel is temporarily cutting about 200 workers from its Michigan plant, highlighting the ongoing struggles of a company that President Donald Trump had showcased as benefiting from his administration's steel tariffs.

The layoffs, detailed in an August 5 notice with the state of Michigan, will cover "nearly every area" at the facility, U.S. Steel said in an emailed statement Tuesday. The company already temporarily cut 48 workers at the Great Lakes plant and expects to cut more more in September, bringing the total number of layoffs to 200.

Hints of trouble at U.S. Steel have been emerging in recent months, with the Pittsburgh-based company in June announcing it would idle two furnaces, one in Michigan and one in Indiana. The company said there isn't a "single event" prompting the layoffs. Rather, "Current market conditions are being impacted by a multitude of factors," including price, demand, import volume, cost and projected profit margins, U.S. Steel said in the statement.

Layoffs aren't currently planned in Indiana, U.S. Steel said.

Trump: Steel "is thriving"

U.S. Steel's troubles appear to undercut Mr. Trump's efforts to highlight the steelmaker — as well as the broader American steel industry—as a beneficiary of his administration's steel tariffs. For instance, last year he retweeted a Fox News article about an Indian steelmaker investing in the U.S., adding that "U.S. Steel is adding great capacity also."

And in June of last year, Mr. Trump spoke at a U.S. Steel plant, highlighting the connection between his administration's tariffs and what he described as new job-creation at the company. "Thanks to our tariffs, idle factories throughout our nation are roaring back to life," he said, according to a transcript.

Mr. Trump added, "And just last month, U.S. Steel announced the reopening of the second blast furnace, far ahead of schedule, meaning almost a thousand jobs."

Last week, Mr. Trump told an audience at a Royal Dutch Shell factory that steel "was dead" until he placed new tariffs on imported steel last year.

"And, by the way, steel — steel was dead. Your business was dead. OK? I don't want to be overly crude.  Your business was dead. And I put a little thing called 'a 25 percent tariff' on all of the dumped steel all over the country.  And now your business is thriving," Mr. Trump said, according to remarks posted on the White House website.

Plunging stock

U.S. Steel's stock price has plummeted more than 70% since March of 2018, when Mr. Trump first announced plans to slap tariffs on steel imports. And despite the Trump administration's efforts, the U.S. steel industry is struggling with a number of issues. 

For one, prices for hot-rolled steel coil are down about 37% from their 2018 peak, according to Reuters. That kind of steel is used for construction and in the automotive industry, whose pace of growth is slowing.

The steel industry is also dealing with a "glut" of supply, Bank of America analyst Timma Tammers wrote in a recent note titled "steelmageddon." She forecasts that prices for hot-rolled coil in 2022 will fall even further from recent prices.

New Pennsylvania plant

U.S. Steel is spending more than $1 billion to build a new processing facility in Pennsylvania in order to lower its costs and better compete with its U.S. competitors, something Mr. Trump touted in May in a tweet.

For now, workers in Michigan will wait.

"As of now, the market stagnation of our product is under constant evaluation in anticipation of market changes for the better," Andrea A. Hunter, president for the United Steelworkers union local, wrote to members August 1, informing them of the upcoming layoffs.

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