AI Data Centers Drive Up Energy Costs for US Manufacturers, Threatening Trump's 'Made in America' Plan
Rising electricity costs due to data center demand are squeezing US manufacturers in the Rust Belt, potentially undermining President Trump's manufacturing revival plan.
US manufacturers in many Rust Belt cities are facing significantly higher electricity costs as growing energy demand from data centers strains PJM Interconnection, the largest power grid operator in the United States. This squeeze on profit margins for steelmakers and brick factories could further undermine President Donald Trump's 'Made in America' plan to revive US manufacturing, while Trump has simultaneously championed the tech companies behind the AI data center boom.
Factory electricity bills are generally rising faster than those for other business or residential customers, according to a Reuters analysis. For instance, Belden Brick Company, a 141-year-old brick manufacturer in Ohio, saw its monthly bills soar from $1,600 to $12,000 due to a higher capacity charge in PJM's 13-state region. Meanwhile, the Steel Manufacturers Association warned that US steel companies concentrated in the Rust Belt are paying tens of millions of dollars in additional power costs annually.
Electricity accounts for 20 to 40 percent of total steel production costs. Each electric arc furnace used in steelmaking has an operating power load between 40 and 200 megawatts, and the entire US steel industry draws up to 11 gigawatts at peak production. Data center construction requires an estimated 1 million tons of steel per year, benefiting steelmakers, but their energy demand has also raised operating costs. Ohio-based steelmaker Metallus reported its electricity costs jumped by 70 percent since 2024, resulting in an extra $15 million in annual energy expenses.
The higher costs coincide with many states in PJM territory attracting large AI data center projects with substantial electricity needs. This growth has driven PJM's capacity prices—paid to power generators based on supply and demand forecasts—from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in 2026.
