AI data centers are creating a new pressure point for US manufacturing. In many Rust Belt cities and towns, factory power bills are climbing as electricity demand rises across the largest power grid operator in the United States.
That creates a direct tension inside President Donald Trump’s economic agenda. The administration has promoted a “Made in America” manufacturing revival while also championing the tech companies driving the AI data center boom.
Why factories are feeling the grid squeeze
The pressure is especially visible in the 13-state region served by PJM Interconnection. According to a Reuters analysis cited in the source article, factory electricity bills are generally rising faster than bills for other business customers or residential customers.
For manufacturers, electricity is not a minor overhead line. It can be central to production. That is why higher capacity charges and rising power costs can quickly affect margins, pricing, and investment decisions.
The Belden Brick Company, a 141-year-old brick manufacturer in Ohio, shows how severe the shift can be. Its electricity bills have risen from $1,600 to $12,000 per month because of a higher monthly capacity charge in PJM territory.
Steelmakers face a similar problem at larger scale. The Steel Manufacturers Association warned that US steel companies concentrated in the Rust Belt region served by PJM Interconnection are paying tens of millions of dollars in higher power costs per year.
Steel gains customers but pays more to operate
The steel industry sits on both sides of the AI buildout. Data center construction requires an estimated 1 million tons of steel per year, giving US steelmakers demand from the same boom that is stressing the grid.
But the operating burden is growing too. Electricity accounts for 20 to 40 percent of the total production costs of making steel. 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 of power at peak production across all facilities.
The Ohio-based steelmaker Metallus described its electricity costs as having jumped by 70 percent since 2024. That increase has led the company to pay an extra $15 million in energy costs annually.
This is the core manufacturing dilemma. The data center boom can create demand for steel, but if the same boom raises power costs sharply enough, it can also make that steel more expensive to produce.
Capacity prices signal a larger supply problem
The immediate issue is not only the energy used today. PJM’s capacity prices are tied to supply and demand forecasts, and those prices have surged as large AI data center projects bring substantial electricity needs into the region.
Reuters reporting cited in the source article said PJM’s capacity prices rose from $28.92 per megawatt-day in 2024 to $329.17 per megawatt-day in 2026. Those costs flow through the power system and can land heavily on large industrial users.
PJM has also forecast that electricity demand in its territory will surpass available supply by 6.6 gigawatts starting in 2027. The Wall Street Journal describes that gap as equivalent to more than six nuclear power plants.
For manufacturers, that forecast matters because reliability is as important as price. The Wall Street Journal highlighted warnings from steel industry executives that production outages could become more likely if local power grids are overwhelmed by demand.
Manufacturers have few simple options
Some US manufacturers have responded by raising prices paid by customers to partially offset rising electricity bills, Reuters reported. Others are considering relocation of their businesses.
Neither option is easy. Passing along costs can weaken competitiveness. Moving a factory can be disruptive, expensive, and uncertain. Absorbing the costs can pressure margins and reduce the money available for operations or investment.
Those outcomes would work against the administration’s stated manufacturing goals. The source article notes that the Trump administration claims to have prioritized US manufacturing despite the loss of 83,000 manufacturing jobs in Trump’s first year back in office.
The policy challenge is also complicated by the administration’s support for the data center sector. The White House has touted getting Big Tech companies to pay for new power generation and transmission infrastructure by signing a Ratepayer Protection Pledge, but the source article says that pledge lacks any meaningful enforcement mechanism.
The Trump administration also joined state governors in pushing PJM to hold a one-time backstop auction for purchasing new power supply capacity. Even so, the broader problem remains: the United States needs enough new power generation and transmission lines to serve AI data centers, manufacturers, other businesses, and residential customers.
Power choices now shape manufacturing costs
The source article points to another constraint: renewable energy projects involving wind and solar power have faced administration efforts to stop them. It also cites a wider wave of power project cancellations.
In 2025 alone, the United States saw the cancellation of power projects totaling 266 gigawatts of generation capacity. Michael Thomas, CEO of the Cleanview data platform that tracks renewable energy and data center projects, described that as equivalent to 25 percent of America’s current electricity generation capacity and more than the total electricity generation of Texas. Clean energy projects accounted for 93 percent of those project cancellations.
The Trump administration’s cancellations of various wind power projects were one contributing factor. Thomas also pointed to local opposition to renewable energy projects in states such as Ohio and Indiana that were courting new data center development, along with a lack of new transmission lines leading to high interconnection costs for new clean energy projects.
The takeaway is straightforward. If states and the federal government want both AI data center growth and stronger local manufacturing, electricity costs cannot be treated as a side issue. The grid is becoming part of industrial policy, and factories are already paying for the strain.