The conventional wisdom is that foreign imports have caused the demise of the American steel industry.
It’s not true, says Mark Perry at AEI’s Carpe Diem blog. The main reason for the loss of US steel jobs is a huge increase in worker productivity, not imports. And the jobs aren’t coming back. The graph below says it all
As Perry notes:
In the 1980s, American steelmakers needed 10.1 man-hours to produce a ton of steel; now they need 1.5 man-hours (see chart above), says Joe Innace of S&P Global Platts. Most American steel is now made at super-efficient mini mills, which use electric arc furnaces to turn scrap metal into steel. (Traditional integrated steel mills make steel from scratch, feeding iron ore and coking coal into blast furnaces.)
Some mini-mills need just 0.5 man-hours to produce a ton of steel, Innace says. Increased productivity means today’s steel mills don’t need as many workers. Steel industry employment peaked at 650,000 in 1953. By the start of this year, U.S. steelmakers employed just 143,000.
The Trump Administration’s decision to impose tariffs on steel imports is bad policy that only seeks to bring back jobs that are long gone. Tariffs won’t help the economy or steel workers.
That’s difficult to do when you deny economic reality.
Add to this: Economist Milton Friedman Talks Steel Tariffs In 1978
If we are at war with a steel producer who do we call to get steel to produce guns and tanks?When countries charge us a 25% tariff on a product and we charge them nothing on the same item,that’s not free trade,that’s stupid trade.
It may have changed, but when I managed a machining and distribution facility the steel produced by the mini-mills did not have the proper chemistry for our machined components for high pressure fluid flow. We needed to buy some of our steel from foreign sources to get the necessary properties and quality and other types from mills. Have our large mills been outflanked by other countries that capitalized more efficient processes, while we could not afford to? Should we look at a segment of the user base that specifically feeds the critical defense projects and recapitalize them so we are can be self-sufficient and protect them with tariffs or some other means?