“I F I HADN’T been elected, you would have no steel industry right now,” declared President Donald Trump last month. He claimed that his “massive” tariffs of 25% on steel imports, imposed in March last year, have returned the domestic industry to rude health. A year ago he would have been right, if habitually hyperbolic. A tonne of hot-rolled coil, an industry benchmark, which sold for roughly $600 in America at the start of 2018, fetched over $800 by the summer. Volumes that American steelmakers shipped domestically rose too, by 5% in 2018 compared with the previous year.

Today the boast looks out of date. Steel prices have slumped back to pre-tariff levels. Although the price of iron ore, from which a third of American steel is smelted, has tumbled in the past month, it remains roughly double what it was a year ago. Steelmakers’ profits collapsed. Nucor, US Steel and Steel Dynamics, the country’s three biggest producers, all reported a steep fall in second-quarter earnings. The industry’s share prices languish a fifth below their level a year ago (see chart). Mr Trump’s recent promise to force federal agencies to buy steel with at least 95% domestic content, up from a minimum of half today, is unlikely to change things. It could even make matters worse.

The reason is economics. By raising domestic prices the tariffs distorted incentives. The extra cash, combined with an apparent rise in demand, induced steel companies to splash out on new capacity. Timna Tanners of Bank of America Merrill Lynch estimates that by 2022 the projects currently in the works could increase output by the equivalent of a fifth of America’s steel consumption in 2017.