The steady decline of America’s steel industry is continuing, despite President Donald Trump’s efforts to protect it through tariffs on imports.
The latest sign came on Thursday, when Moody’s downgraded its outlook for the entire domestic industry to “negative” from “stable.” The credit rating agency cited slowing manufacturing overall and a continued decline in prices.
“We do not expect the situation to improve soon,” Carol Cowan, a senior vice president at Moody’s, wrote in a report. The benchmark steel price in the United States has declined steadily since the second half of 2018, when prices were just above $800 a ton, down to $520 a ton, she noted.
The industry downgrade isn’t expected to drive up the cost of borrowing or affect corporate profits, as downgrades of specific companies do. But it will factor into the determination of company credit ratings going forward.
Trump came into office in 2017 promising to revive the steel industry and save jobs. His tariffs — 25% on most steel imports and 10% on most aluminum imports — initially pushed prices higher. And some steelmakers even restarted some of their shuttered mills.
But the increased steel production and prices didn’t last, and some steelmakers, including US Steel (X), have more recently closed mills. In addition US Steel (X) and rivals Nucor (NUE) and Steel Dynamics (STLD) have warned earnings that their profits will suffer in the second half of this year.
The tariffs, along with falling demand and prices, have helped to reduce imports, which are down about 13%, according to Moody’s report.
“The lower prices provide less incentive for steelmakers in other countries to try to import to the US [market],” said the report.