Steel for Fuel, Tariffs for Steel

The blog’s premise is that the transition swaps burned fuel for built steel, so a steel price passes into the cost of clean power. Steel imports have been tariffed since 2018, and the exemptions many countries held ended in February. American prices have long run above other regions, have been especially sensitive to tight supply and demand since 2018, and the premium over the next most expensive region widened again after February, which Lubershane reads as the tariff showing through a noisy market. Wind and solar use far more steel than other forms of generation, so that price is a real slice of what they cost to build.

Then it turns: the same tariff lands harder on fossil fuel, somewhere the headline does not look. Steel barely matters to a gas-fired power plant, but it matters greatly to producing the gas, because pipe is a large share of a well and a larger share of the pipeline connecting it. Gas is also macro-exposed, because much of American supply comes out of oil wells. A trade war that tips the world into recession would knock oil prices down just as tariffs raise American production costs, and gas output could fall with it. Yet he rates the odds pretty good that global gas demand keeps growing through a recession anyway, pulled by power for data centers, electric vehicles, heat pumps and air conditioning. Rising demand against depressed supply is his obvious recipe for higher gas prices, and in that case he thinks it entirely possible that the tariffs leave new renewables more competitive with gas generation, on the margin, rather than less.

That chain is a scenario, not a forecast, and needs every link. What he commits to instead is the part both branches share: steel is in the grid as well as in generation, so the tariffs raise the cost of electricity either way.