One of the centerpieces of President Trump's trade war is his 25 percent tariff on all steel and aluminum imports. The point is to make those foreign imports more expensive, and thus more comparative in cost to American-made steel, driving more domestic demand back to U.S. producers. On that score, the tariffs are working: The domestic price of steel rose 30 percent in just the last six months. U.S. Steel, one of the country's biggest producers, is forecasting a 60-percent increase in pre-tax profits.
"The steel industry is one of the great things to be talking about," Trump said last week. "The manufacturing jobs are back."
There's a hiccup, however: Most steelworkers aren't seeing much benefit from that surge in sales. And they aren't happy about it. In fact, they may be about to strike if negotiations go south.
U.S. Steel and ArcelorMittal are the country's two largest steel producers. They have roughly 30,000 members of the United Steelworkers union between them, and crank out about 40 percent of American production. The contracts covering both companies ran out at the start of September, and the union has been trying to hash out a new arrangement with them ever since.
U.S. Steel is offering a new six-year contract, with a 4 percent raise the first year, 3 percent the next two, and 1 percent for the remaining three. It would also introduce some profit-sharing, with further bonuses tied to the company's future margins. And it's throwing in a one-time $5,000 payment to help workers with their health-care costs. As for ArcelorMittal, the company is suggesting a three-year contract, with a pay increase of 2 percent the first year, and 1.5 percent thereafter.
But in the context of the bonanza the steel industry is going to enjoy under Trump's tariff policies, union members consider those offers insultingly low. "Top company officials have given themselves more than $50 million in pay and bonuses since 2015 while the hourly workforce has not received a wage increase over the same period," the union said in a statement. Don Furko, the president of United Steelworkers Local 1557 in Clairton, Pennsylvania, told the Pittsburgh Post-Gazette that "[b]etween the tariffs and the tax break for corporations, they stand to make $2 billion this year."
Health care, in particular, is a sticking point. Both companies are pushing for workers to take on a greater share of their health-care expenses via higher premiums and copays, in order to reduce the cost of their health benefits. The union argued that ArcelorMittal's proposed changes would more than cancel out any boost to workers' pocketbooks from the wage hikes. And Furko argued U.S. Steel's one-time $5,000 payout also wouldn't make up for the increased out-of-pocket health expenses.
The union is demanding either bigger pay hikes in the new contract or for the companies to drop the proposals to increase health premiums and copays.
History is also playing a roll here. American steel producers have struggled for the last few years, as a flood of international capacity — particularly from China — drove prices low. Trump's tariffs are meant as a corrective. But in the contract that just expired, and that was initially negotiated in 2015, U.S. Steel employees agreed to a three-year pay freeze to help out the company. "U.S. Steel was in trouble and workers understood that and worked with them. We did not demand, nor did we receive any pay increases," explained United Steelworkers 1899 Chairperson of the Grievance Committee Tom Ryan. "We felt like we made sacrifices to help keep that company on its feet. Now U.S. Steel is lined up to have a significant recovery and we want to have a part of that recovery."
In a sign of just how serious the workers are, locals across all nine U.S. Steel plants authorized the union to conduct a strike earlier this month. According to reports, the votes were all either unanimous or by massive margins. This doesn't mean a strike is inevitable. But it does mean the union could decide to strike with as little as two-days notice, should they think the situation calls for it. The Post-Gazette reported that U.S. Steel hasn't had a work-stoppage since a six-month lockout way back in 1986.
More broadly, the fight between the steel industry and its employees highlights a simmering contradiction in President Trump's blue-collar populism.
There's no doubt the tariffs have delivered on the president's promise to help out the steel industry. (Though whether they'll hurt other areas of U.S. manufacturing that pay for steel as an input cost is another matter.) But every company is its own entity, with rival factions vying for power and for a cut of revenues. Helping out the steel industry does not necessarily translate into helping out steel workers. Across industries, owners tend to have all the power these days, and workers little-to-none — a fact that's roiling American capitalism.
Even as Trump has ramped up nationalist protectionism, he's moved to exacerbate this workers-versus-owners power imbalance. With Republican help, he has scrapped regulations to boost overtime pay, made it harder to police workplace safety violations, and more. His appointment of Neil Gorsuch to the Supreme Court helped usher in the recent Janus decision, which could decimate public sector unions. And the arrival of Brett Kavanaugh, Trump's latest pick, would further tilt the Court's ideological balance against workers.
For now, negotiations between U.S. Steel, ArcelorMittal, and the steelworkers union will continue. U.S. Steel was sanguine in its statement to the Wall Street Journal, saying: "[t]alks are ongoing, and we continue to work diligently to reach a mutually agreeable conclusion." One thing everyone seems to agree on is that they'd like to avoid a strike if they can.
And Trump had better hope they do. Because if a strike comes, the president may be forced to declare just whose side he's on.