U.S. Steel to reopen Granite City Works

The Granite City Works in Granite City, Illinois. (PHOTO: U.S. Steel)

When the steel industry hit the skids three years ago, one of the biggest signals of woe was the shuttering of U.S. Steel’s mill in Granite City, Illinois in 2016. That mill took iron ore from the Mesabi Range. Company officials cited its closure as one of the reasons for the idling of Keewatin Taconite.

Yesterday, U.S. Steel announced that it was re-opening its Granite City Works in Granite City, Illinois, just across the river from St. Louis, Missouri. More than 500 workers are going back to work. The company cites improved demand for steel amid news of President Trump’s tariffs on all foreign steel and aluminum. Reports indicate Trump may implement the tariffs today.

Of course, this all sounds good for Iron Range mines, but the truth is that the region’s taconite mines were all back up and running last year. The steel market uptick we see now began near the end of the Obama Administration. Some argue that Trump supercharged the boom. Others say it was happening anyway with China’s decision to stop dumping cheap steel.

In fact, that’s the rub of the entire tariff issue. China was beginning to behave the way we wanted them to. Their share of the U.S. market was below 4 percent. The tariffs will hit our allies in Canada and Europe much harder than the country most responsible for the problem.

Nevertheless, Trump decided to roll the dice on straight protectionism across the board.

The surge of demand and higher prices for domestic steel will positively affect some communities around the Rust Belt. But what it offers the Iron Range is a temporary infusion of job security, not so much job growth. U.S. Steel’s mines at Minntac and Keewatin Taconite, were already running full and will continue to do so.

As I wrote recently, Iron Rangers regard Trump’s tariffs positively. Over time, however, we will begin to experience the negative effects of a trade war. That will be the true test of the policy. Should steel tariffs trigger inflation and a market collapse, as they did in 1932, nobody on the Iron Range will benefit. Indeed, we’ll be growing potatoes in our back yards.

Fact is, we have economic disparities throughout the Iron Range. Those problems sit outside the purvey of steel tariffs. That’s because even with red hot iron ore production, most people don’t work in mining. Those days are forever gone. But we’ve been over this.

My personal read is that the complexities of the modern economy will render the tariff debate as clear as mud, seen by different political actors as representative of what they already believe. In other words, we’re still paying Trumpball. And the only rule of Trumpball is there are no rules, only chaos.


Comments

  1. independant says:

    Aaron, come on. People with an arms length understanding of the steel and iron ore industry might buy what your trying to sell. The iron range currently has millions of iron units that are still off line compared to three years ago. I know your smart enough to understand how China gets their steel into this country beyond the 5% number you indicate. Would you have wrote this same piece if these same tariffs were initiated by President Obama, I doubt it.

    • Elanne Palcich says:

      Independent–please explain the millions of iron units that are still off line. Just curious.
      Thanks.

      • independant says:

        Elanne
        The Magnetation plants which are all still shut down produced about 3 million tons from what I remember and Mesabi Nugget which is also down produced a value added iron nugget to the tune of hundreds of thousands of tons per year. These operations still being down is costing the area hundreds of direct hire jobs and hundreds of support industry jobs along with the millions of dollars cut from our local economies from lost vender purchases.

        • Ranger47 says:

          Your approach of consistently shining light on the facts with your comments always wins out in the end Independant. Keep up the good work.

  2. True, I was more vocally pro-tariff in 2016 when we were getting dumped on by China. The tariffs were more effective than I thought then, which I copped to here: http://minnesotabrown.com/2016/07/steel-tariffs-working.html

    But the market continues to change. China is supplying itself now. In fact, China doesn’t give a shit about us. It dumps because dumping is a way to keep its people working and they don’t care about the consequences on our markets or workers. So yeah, they’ll also sell to Vietnam who then dump because they also don’t give a shit about our workers. So we’re striking hard at China now, at a time when it won’t affect them, but actually being much harder on our allies. OH WAIT. Now I see the president is hemming and hawing about Canada and Mexico, and will probably acquiesce to Europe before the end fo the day. So what are we doing?

    Yeah, Iron Range mines have unused capacity now. They also have huge capital investments to make. How much capacity did United lose with its various problems these last two years — all related to aging infrastructure and a way overhyped “mustang” pellet. And we still are wedding to blast furnaces for the foreseeable future — something that will eventually bite us in the ass like an alligator.

    The mines got a huge tax cut this year. And they’re going to get some kind of tariffs which certainly won’t hurt them. This is probably their last chance to upgrade for value added and direct reduced iron or we’re just whistling past the graveyard here. There’s only so much that tariffs can do, and if we are going to use tariffs it would be great if we could have a cohesive strategy rather than the shambling chaos we’re getting.

    • Ranger47 says:

      Having an overriding attitude of anti-Trump has turned many, many good people into hyper-hypocritical, narcissistic cynics. Unfortunately, the older one gets the greater probability cynicism becomes a one-way path, and once taken the way back is lost forever. CNN is the poster child of this attitude, and look what’s happened to their viewership. Sad..

  3. Gerald S says:

    In the long run, the value of the tariffs to the Range will ride on the balance that results between higher prices for American ore due to the tariffs versus the loss of sales by end users facing higher costs for steel and aluminum as well as retaliatory tariffs and the impact of deals like the TPP. If end users like Caterpillar lose significant amounts of business to Japanese, Scandinavian, and German rivals in the international market due to higher prices for their products and foreign tariffs blocking purchases, miners actually start to lose money instead of gaining. Multiply this by hundreds of other end user businesses and you see what happens.

  4. Joe musich says:

    So the Trump voters in Hibbing are drunk with the glory of his benevolent and godly leadership ! The trade off figures are potentially a net loss for Minnesota even larger then the gain for the range. But who cares as long as Trumpers are deluded into thinking they get theirs. The problem is as he dances through scandal to misstep to utright foolishness the lack of a plan, a coordinated strategy to avoid tragedy. Full speed ahead to wealth everything else be damned. There I was in the Cobb Cook schools playing duck and cover games in the mid 1950s. The duck and cover of today is hiding under the shell from reality. Yea still a shell game. I walked away from the range with a healthy skepticism drilled into me by city elders fed up with the lies of the mining supporters. I would suggest that the digging that needs to be done is into the BS being propagated around this tariff nonsense as this article does so well. Return to deep skepticism oh northern woods. Oh yea and I guess we now know the reason the daughter went to the Olypmics at the last minute. The question is what or who did she give away for the misdirect to cover the collusion ? But I digress. In the range of old that is the kind of conversation you could hear at Cheeco’s. Skepticism, doubt, reading between the lines searching for the back story. A- the boys sang, “…don’t get fooled again…”

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