The 2024 U.S. presidential election: who will forge the future of American steel?

The upcoming 2024 U.S. presidential election stands to significantly impact the American steel industry, marking a pivotal moment for a sector that has long been a bellwether of broader economic health. The candidates, Kamala Harris and former President Donald Trump, represent starkly different visions for the future of the American steel manufacturing industry, particularly on energy and international trade relations. The policies each candidate proposes could reshape the steel industry in fundamental ways, influencing everything from raw material costs to international competitiveness. With issues like sustainability, foreign investment, and labor protections on the line, the stakes could not be higher.

But first, let's refresh what happened over the past few years, as policy changes have played a major role in shaping today's industrial landscape.

Historical context: steel policies since 2016

The U.S. steel industry has faced considerable shifts since the 2016 election of Donald Trump, which marked the beginning of a new era in trade and industrial policy. One of the most notable moves was the implementation of Section 232 tariffs in 2018, aimed at protecting national security by imposing a 25% tariff on steel imports. This measure was designed to revitalize the domestic steel industry by curbing imports from countries like China, which were allegedly dumping cheap steel and distorting global markets. While these tariffs led to a boost in domestic production and employment in some regions, they also drove up costs for steel consumers, particularly in downstream manufacturing sectors, as noted by the nonprofit organization Tax Foundation.

The Biden administration, which took office in 2021, opted for a more balanced approach, maintaining some tariffs while easing restrictions in order to strengthen relationships with allies. This included negotiations with the European Union to replace strict tariffs with quota systems, allowing a certain amount of steel to enter the U.S. without duties, as part of broader efforts to resolve trade tensions. These ongoing adjustments reflect the administration's attempt to balance national economic interests with the need for international cooperation and sustainability goals.

Comparing candidate policies and market effects

According to Politico, regardless of the election's outcome, the steel industry is expected to remain shielded by protective measures. While both candidates agree on safeguarding the domestic steel industry, their approach to specific tools —such as tariffs, quotas, or incentives—will probably differ.

In other terms, protective measures will remain in place, but trade policies are likely to shift depending on the election's outcome. A re-election of former President Donald Trump may revive his "America First" strategy, emphasizing strong protectionist policies and tariffs on foreign steel to shield U.S. manufacturers from international competition (particularly from China and Mexico). Trump's approach may lead to a more isolated market, increasing costs for imported steel but providing a significant boost to domestic producers, as we have already seen in the past.

Alternatively, a win by Kamala Harris might sustain the Biden administration’s mixed approach, notes Fastmarkets, which has combined selective tariff measures with attempts to enhance international alliances. Harris's strategy would focus on balancing tariffs with multilateral agreements, aiming to maintain favorable trade relationships while protecting key industries.

Steel and sustainability

Both candidates have shown contrasting views on energy policy and environmental standards, which directly influence the steel industry’s trajectory towards decarbonization. Trump’s stance generally promotes traditional manufacturing methods and is less restrictive on emissions.

In contrast, Harris’s promotes more rigorous environmental standards aligned with the administration’s green initiatives, such as incentives for reducing carbon emissions. These policies could push steel producers to invest heavily in cleaner technologies, which may initially increase production costs but also enhance the industry's long-term sustainability and competitiveness. This could drive further investment in green steel technologies, affecting how U.S. steel companies approach production in the coming years.

Foreign investment and supply chain security

The election has also intensified debates over foreign ownership in U.S. steel assets, illustrated by the controversy around Nippon Steel's recent bid for the company U.S. Steel. This bid has raised concerns about the potential risks of foreign control over critical American industries. The debate revolves around whether foreign ownership could undermine the stability of the U.S. steel supply chain and expose it to external influences, leading some policymakers and industry stakeholders to voice opposition.

The Biden administration, with Harris playing a pivotal role, has shown caution toward foreign acquisitions, citing national security concerns—a stance echoed by various labor unions and lawmakers across party lines. This trend could continue if Harris takes office; Politico states that "Harris has made it clear that her administration will prioritize national security concerns when it comes to foreign acquisitions, ensuring that critical industries remain under American control."
Trump may take a more aggressive stance on retaining American-owned steel assets by imposing stronger restrictions on foreign investments. This would limit external capital but "ensure critical industries remain under American control, a move aimed at reinforcing domestic capabilities."

Final countdown: what the 2024 election means for the steel industry

As the election comes to a close, we are on the verge of finding out who will lead the country, and by the end of the day, we will know the winner and how their policies will shape the future of the steel industry.

For U.S. steel industry stakeholders, the election's outcome will likely influence tariff structures, green technology investments, and policies around foreign ownership. While both administrations are aligned in their goal of protecting the steel industry, they bring distinct approaches to tariffs and environmental goals, shaping the industry's competitiveness and regulatory landscape. Steel companies and allied sectors are keeping a close watch on the election, knowing its results will affect their strategic planning and operational environment well beyond 2024.

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