Trade

“We’re very pleased with the results”

JM Ashby
Written by JM Ashby

The CEO of Nucor, the largest steel producer in America, appeared on CNBC last night where he praised Trump's tariffs on foreign steel and aluminum, saying that he's "very pleased" with the results -- but have Trump's tariffs actually helped the industry? Have Trump's tariffs even helped Nucor?

The evidence available to us says Trump's tariffs haven't helped the metal industry or Nucor as much as it has harmed other industries, but even CEO John Ferriola's words seem incoherent.

I was unable to make any sense of this, but maybe you can. The Nucor CEO told CNBC that they've been able to meet demand and give customers what they want, but Nucor posted lower than expected revenue yesterday afternoon. Ferriola also claimed that prices are down while also saying they're raising prices.

On Thursday, however, Nucor reported weaker than expected fiscal second quarter profit and revenue, with per-share earnings of $1.26 on sales of $5.9 billion in revenue.

Citing weather issues and bloated inventories for the weakness, Ferriola said the company is seeing a “more normalized ordering pattern” now.

Ferriola said Nucor has recently introduced price hikes on steel sheet products and that the tariffs are effective in keeping Chinese companies from flooding the market and lowering the price.

The price of steel is actually lower for downstream customers than before the tariffs went into effect, he said.

This seems like intentionally misleading executive babble to me, but empirical evidence tell us Trump's tariffs have not necessarily helped the metal industry and Nucor shareholders specifically cannot be "very pleased" with the result.

Moody's Analytics took a closer look at the metal industry now that Trump's tariffs on foreign metal have been on the books for over a year and found that the largest companies have barely added enough jobs for anyone to notice.

U.S. steel production was rising before the tariffs, and it rose by about the same rate after the tariffs went into effect, before flattening out in recent months. Aluminum production ticked up after the tariffs hit, but then flattened out as well.

Employment in the protected industries was rising before the tariffs, and those industries have added 16,730 jobs during the 13 months’ of tariffs. Yet Moody’s Analytics calls that number “paltry,” in a total labor force numbering 151 million.

In Gary, Indiana, the city most dependent on steel, only 250 jobs were gained during the 13-month period. Owensboro, Ky., which is most dependent on aluminum, gained just 60 jobs.

Industry stocks tell a more troubling story, with Nucor (NUE) down 15% during the last 12 months, AK Steel (AKS) down 52% and US Steel (X) down 59%. The S&P 500 Index (^GSPC) was up 6% during that time. As for aluminum producers, Alcoa (AA) and Century Aluminum (CENX) are both down 52%.

It's not that these aren't valuable jobs and it's great that someone found a job in these cities, but what did it cost us?

According to the Treasury Department, the Trump regime has collected over $50 billion in tariffs during the current fiscal year.

Even 16,000 jobs are not worth $50 billion. Foxconn was suppose to add 13,000 jobs in Wisconsin at a cost of $4.5 billion, but they may add fewer than 1,000 just like the city of Gary, Indiana.

Someone is getting rich from Trump's tariffs and it's not average Americans or workers. It's Midwestern metal executives that Trump wants in his back pocket for the next election.

It's anyone's guess how many times metal stocks have been shorted by insiders who knew what Trump's next moves would be.

  • muselet

    Sounds to me like John Ferriola is whistling past the graveyard. Blaming “weather issues and bloated inventories” for lousy per-share earnings is weak tea.

    If next quarter’s earnings are also not-so-hot, I wonder how long Ferriola will keep his job.

    –alopecia