President Donald Trump believes that the 25 percent tariff on Steel imports will provide the necessary boost for domestic production in the USA. The tariff will affect countries like Canada, European Union, China, North Korea and Australia who export steel to the United States. These countries fear that lower exports could result in loss of jobs for thousands of employees working in the Steel Industry. On the other hand, President Trump wants to promote higher production and more jobs for his own country.

Declining employment in the steel industry.

Over the years, employment in the steel industry has been steadily declining. As per statista.com, a statistics portal, unemployment rose to an alarming proportion during 2009 to 2011, however, it has now settled at 4.1 percent.

During the same time, China saw a steady increase in its demand for domestic demand due to government fiscal stimuli and demand for automobiles around the world.

Steel is a strong metal alloy of two elements, mainly iron and carbon and is in high demand in the manufacturing of buildings, ships, automobiles, infrastructure, machines, appliances, and weapons. The iron required to manufacture steel comes from iron ore processed from mines and treatment plants. The employment in this sector too has gone down due to a shift from labour-intensive processes to highly mechanized mining. According to Wikipedia, the statistics for employment in the iron ore mines and treatment plants were a meagre 5,750 employees. The history of iron ore mining dates back to 1608. At that time, iron ore was exported to England and even China!

China dumping cheap steel in the US

One of the reasons could be automation in the steel and iron ore industry, but one just cannot overlook that cheaper steel imports from China is becoming a major problem.

China is the largest producer and continues to flood the US markets with cheap steel. The US has taken measures to improve this situation by taking anti-dumping action and imposing tariffs on imports, but this has had very little substantial effect on China. In the current scenario, President Trump feels strongly about this issue and said "Steel is steel. You don’t have steel, you don’t have a country”.

The imports of steel in the USA are at a record high beside the problem of the high deficit. Most of the imports in the USA do come from Canada, but the cheaper variety coming from China is a big concern for the industry. There is also a fear that lower jobs in this industry could contribute to a rise in unemployment figures in the US. President Trump feels that the tariff may boost domestic production of steel and iron ore mining. Provision of government subsidies may benefit domestic production in this situation, but the world will wait and watch how countries like Canada, China, Australia and North Korea react to the 25 percent import tariff.