As the U.S. steel industry faces an uncertain political landscape, its impact on the economy remains significant. Contributing more than $500 billion annually and supporting nearly 2 million jobs, steel is a backbone of industries such as automotive, machinery, and metal fabrication, according to the American Iron and Steel Institute. Despite its importance, uncertainty about the industry’s future has led to delays in expansion, investment, and hiring.
The emphasis on clean energy and reducing carbon emissions presents both opportunities and challenges for the steel industry. Globally, 70 percent of steel is produced using coal-fired blast furnaces, making steel the second-largest user of coal after electricity production. In the U.S., 70 percent of steel is produced using electric arc furnaces, which produce about 75 percent fewer emissions than blast furnaces. However, electric arc furnaces require significant electricity, and rising electricity costs driven by investments in renewable energy infrastructure could increase the cost of U.S. steel, making foreign steel more competitive even with tariffs.
An increase in corporate taxes could drive U.S. production costs higher, potentially pushing more manufacturing overseas. “Potential corporate tax increases can truly reshape a company’s ability to provide shareholder returns, driving down stock prices as well as access to new capital,” said a 40-year veteran of the steel industry who worked in both commercial and technical roles. The steel industry that remains may struggle to find the capital to expand mill capabilities or invest in technological advancements.
Both major political candidates plan to increase tariffs on imports from China. This move could boost domestic steel production, reducing reliance on imports. However, similar tariffs in 2018 under the Trump administration led to higher materials costs for manufacturers including General Motors, Whirlpool, and Caterpillar, adding billions in expenses that were passed on to consumers. The 2018 tariffs created about 1,000 jobs in steel production, but the increased cost of steel resulted in an estimated 75,000 fewer manufacturing jobs in the U.S.
As the steel industry navigates these complex challenges, its future remains uncertain. With the potential for higher taxes, rising electricity costs, and new tariffs on the horizon, the decisions made in the coming years will shape not only the steel sector, but the broader manufacturing landscape in the U.S. as well.
