Cramer breaks down why Trump's tariffs aren't working for steelmakers like Nucor
President Donald Trump's 25 percent tariffs on steel imports were supposed to be a boon for steelmakers. But now that they're starting to take effect in a tangible way, they're not exactly working, CNBC's Jim Cramer said Thursday.

"The tariffs aren't helping the steel industry; in fact, they may be hurting the steel industry," the "Mad Money" host said.

"The steel stocks have been slaughtered since the tariffs went into effect," he continued. "Just look at the stock of Nucor , the best steelmaker in America and the chief proponent of the 25-percent duty on steel imports. ... Nucor's down about $10 bucks since the tariffs were announced."

Before the tariffs were implemented, the steelmaker was outperforming, logging its best year since the financial crisis in 2017 and its second-best quarter in history this July. But the earnings report Nucor issued last week proved underwhelming, so much so that Cramer apologized for recommending the company's stock after Trump's tariff move.

"Let me read you the killer line when I was going over the release: 'Earnings in the fourth quarter of 2018 are expected to decrease across all three operating segments compared to the third quarter of 2018,'" he said.

The "Mad Money" host floated three ideas for what went wrong with the tariffs, which were intended to raise prices on government-subsidized steel from other countries in order to revive business at U.S. steelmakers.

"First of all, when the government slaps a 25 percent tax on imported steel — basically a federally-mandated price increase — that's going to reduce demand," he said. "We just spoke to Barry Sternlicht. He's the CEO of Starwood Capital — that's a major real estate developer and lender — and he said the price of steel has gotten so excessive that it's actually starting to limit demand."

Second, the United States is now in the throes of a "genuine trade war with China," and tariffs being passed back and forth between the two countries is "bad for business" in the near term, he argued.

"Unfortunately, the steelmakers are very economically sensitive," he said. "Which brings me to the final problem: all of these tariffs raise prices, and when the Federal Reserve sees prices going up, they get very worried about inflation. That's one of the reasons the Fed's gotten so aggressive about raising interest rates. And, look, you do not want to own the steelmakers when the Fed is tightening aggressively."

Over the long term, tariffs could end up working in Nucor's favor if the United States and China were to reach an agreement for China to stop subsidizing its steel exports, Cramer acknowledged.

"But, for now, the bottom line is that even the supposed winners from tariffs aren't winning here," he said. "And as much as I like Nucor, this is simply the wrong time in the business cycle to own a steelmaker. Even if these stocks have bottomed, I think the steel sector is simply too risky to touch for this moment."