Trump’s Steel Policy Is Working. That’s the Problem

Start with the project’s real price tag. Thanks to tariffs and other trade restrictions, US steel prices are among the highest in the world: According to SteelBenchmarker, a metric ton of hot-rolled steel cost $1,293 here — the highest since April 2022 and far exceeding prices paid in Western Europe ($842), on the world export market ($510) or in China ($424).

With steel input (scrap) prices roughly flat since Trump began expanding so-called Section 232 tariffs in February 2025, the differential means protectionism has helped US steelmakers such as Nucor make fat profits while other US manufacturers pay far more for the essential input than their competitors abroad.

Because steel-consuming industries greatly outnumber steelmakers in the US, studies have repeatedly shown that steel tariffs, whether imposed by Trump in 2018 or George W. Bush in 2002, caused a net reduction in US manufacturing output and employment — effects that, in the latter case, persisted for years after the levies were lifted. Considering consumer costs, gains for steelmakers and deadweight losses, the annual bill for the 2018 tariffs was roughly $650,000 for each steel job supposedly saved.

Research on Trump’s more recent tariffs will likely show even larger losses. In the meantime, Iowans can see the effects firsthand at Whirlpool’s refrigerator plant in Amana, where steel tariffs have contributed to major cuts in jobs and production. Or they can talk to someone at iconic tractor-maker John Deere, whose tariff bill exceeds $1 billion.

Whirlpool’s experience points to other tariff costs that don’t show up on an earnings statement. Rather than oppose Trump’s steel levies, the company lobbied to have them extended to appliances — one of many instances of US steel tariffs “cascading” downstream to hundreds of other products. It’s also an example of the historic increase in trade-related lobbying that accompanied Trump’s tariffs, as well as the cronyism long associated with the US steel industry, one of the most protected and politically connected industries in America. (Indeed, even after all the tariffs, Big Steel is today demanding more import protection, this time in the form of additional downstream tariffs or even quotas.)

And for what? The tariffs’ national security rationale was never serious. In early 2018, then-Defense Secretary James Mattis cautioned the Commerce Department against global tariffs because the military needed just 3% of domestic steel production, and most imports came from close allies.1

Nor have tariffs delivered the thriving steel industry that protectionists promised. According to official data, steel imports declined substantially between 2017 and 2025, but so did domestic consumption and exports. As a result, total US steel output last year was only a hair above where it was before the tariffs began.

Federal Reserve data, meanwhile, show that domestic iron and steel firms’ capacity utilization was below both pre-tariff levels and the historic average. That’s because the industry boosted capacity without a comparable gain in output — a telltale sign of policy-induced overcapacity, not an industry hollowed out by unfair trade. (Ironically, steel overcapacity was one of the things Trump’s tariffs were originally supposed to stop.)

That brings us to the Iowa project itself, which looks more like a cautionary tale than a celebratory one. Most obviously, there’s the question of whether the plant will open in 2030 as promised or is just the latest in a long line of big, politicized US investment projects falling short. Per local reports, there’s no construction site, no land purchased in Lee County, no permits issued, no agreement with state economic development officials and no financing. The Indian-owned Mesabi is the corporate successor to Essar Steel Minnesota, which entered Chapter 11 in 2016. Neither Mesabi nor its Indian parent has ever built and run a US steel mill. Skepticism is warranted.

Even if the plant does eventually materialize, moreover, there’s the question of whether it should. Last Friday, Iowa legislators held a one-day special session to award Mesabi almost $1.4 billion in subsidies — about $777,000 per permanent job at the future plant. Leaving aside the red flags attached to an emergency handout to a swing district in a must-win state a month before an election — a handout that state Republicans called the largest corporate giveaway in state history and “political extortion” — the subsidies indicate that not even a global tariff wall and sky-high steel prices are enough to make the project financially viable.

The Mesabi plant also could exacerbate the US industry’s long-term overcapacity problem — and its dependence on tariff protection. The project’s initial 7.5 million metric tons of annual output would constitute more than 9% of the US total today, and promised increases would add 2.5 million more. Current market dynamics — fueled in large part by the generational AI buildout — might support such a large expansion, but steel demand from data centers is expected to wane in a few years, just as the Iowa plant is supposed to come online.

Closing older steel factories could alleviate this overcapacity risk, but — as the White House’s recent attempt to reinvigorate US Steel’s antiquated Granite City plant shows — politics often prevents rationalization. This explains why many investors sold their shares of rival steelmakers Nucor and Steel Dynamics right after the Iowa announcement.

So, this is the Iowa steel project in full: at least five more years of US manufacturers paying the world’s highest steel prices, ever-expanding US tariffs on downstream goods, $1.4 billion in state subsidies, and shameless political pandering and cronyism — all in exchange for a plant that might pour its first steel in 2030, just as the data-center wave is set to break.

Trump and other tariff fans are right that the Mesabi announcement is what their favored policy produces. And that’s very much the problem.