The centerpiece of President Donald Trump’s America-first economic agenda is reinvigorating the manufacturing industry. But his administration is planning to slash a key program that invests in some of the biggest manufacturing industries in the US, including in Vice President JD Vance’s hometown in the heart of the Rust Belt.
The Biden administration planned to award a $500 million grant to steel giant Cleveland-Cliffs in Middletown, Ohio, to help it upgrade its aging blast furnaces. A further $75 million was awarded to the company for a similar project in Pennsylvania.
The new furnaces, which use climate-friendly hydrogen, natural gas, and electricity instead of coal, would have extended the plant’s life and given the steel company a leg up in the future.
However, those grants, which would have created over 100 permanent jobs and 1,200 construction jobs in Middletown alone, are set to expire under the Trump administration, according to internal administration documents obtained by CNN.
Two people familiar with the situation told CNN that representatives from the Department of Government Efficiency were involved in deciding which programs to cut and which to keep.
“An unelected billionaire who made his vast fortune off government contracts should not be able to unilaterally stop these programs,” Democratic Rep. Marcy Kaptur of Ohio told CNN in a statement, referring to Elon Musk, whose efficiency department has worked to cut programs and budgets across the federal government.
Ben Dietderich, an Energy Department spokesperson, said in a statement that “no final decisions have been made” about whether the funding would be cut, and that “multiple plans are still being considered.”
For months, the Energy Department has frozen billions of dollars in grant programs appropriated by Congress during the Biden administration while it reviews them and decides which to cut.
According to internal documents obtained by CNN, the department’s $6.3 billion program to assist Cleveland-Cliffs and other large industrial companies in modernizing their equipment could be reduced by two-thirds.
Experts fear the cuts will have a chilling effect on America’s manufacturing industry, especially as the global economy reels from Trump’s tariff war. Trump’s tariffs, which were intended to benefit manufacturing, may be painful in the short term as they roil markets, fuel recession fears, and disrupt supply chains.
Some projects have been spared, including a $500 million award to aluminum company Century Aluminum to build a new and more efficient smelter, the country’s first new smelter in decades.
The haphazard cuts to major projects in red states such as Ohio perplexed some stakeholders.
According to one source, it “makes zero sense” to cut a major federal grant to one of the biggest employers in the vice president’s hometown.
“There is no political logic to it,” the source stated. “Cliffs is the country’s last major vertically integrated steel manufacturer, and they have been very supportive of Trump’s tariffs. This reads like a bunch of 24-year-olds at DOGE are working on it.
Shawn Coffey, president of the union that represents over 2,000 Cleveland-Cliffs Middletown employees, called the grant funding “huge.”
“Anytime you can upgrade a facility and make it more environmentally friendly, it extends the life of the mill,” said Coffey, president of the International Association of Machinists Local 1943. “It’s for the future of my kids, grandkids.”
If that funding is removed, Coffey said it will be up to the company to decide whether or not to cover the project’s costs on its own. Cleveland-Cliffs did not respond to CNN’s request for information about the funding.
“If they decide not to go through with it, that’s 170 jobs we won’t be getting in the next five years,” Coffey told the crowd. “Does it alter the perception of Middletown Works? It depends on what the future brings. We’ll regroup and continue to make steel in Middletown as best we can.”
A former employee at DOE’s Office of Clean Energy Demonstrations, which oversees the $6.3 billion grant program among others, told CNN the Trump administration’s federal grants freeze disrupted early scoping work on dozens of projects selected under the Biden administration.
Many projects that had received small amounts of funding to start construction planning suddenly had that funding shut off.
“It was almost like an on-off switch,” the former employee said.
Further complicating matters, DOE staffers were told not to communicate with companies about the future of their federal grants.
“The whole point of OCED and (the $6.3 billion grant program) is investing in companies and industries that haven’t been invested in for decades – steel, cement,” the former employee said. “You can’t say you’re supporting manufacturing and then do things that prevent that manufacturing from coming in.”
The climate-friendly Biden administration saw the grants as a way to encourage major industries to reduce pollution. However, they saw additional benefits, such as modernizing a key US industry and making it competitive for future generations.
“What we were trying to do with these kinds of programs was to strengthen US economic competitiveness and reshore manufacturing, which aligns really well with the Trump administration and its energy abundance agenda, re-shoring manufacturing agenda,” said Sameera Fazili, Biden’s deputy director of the National Economic Council. “And instead, the Trump administration has just had this slash and burn policy.”
Fazili warned that cutting back on these grants, especially given the economic uncertainty caused by Trump’s tariffs, could severely harm key US industries such as steel, aluminum, and cement.
“You can’t cut your way to economic competitiveness; you have to make strategic public investments,” she told reporters.
