Overview of the Situation
In January, U.S. President Donald Trump imposed additional tariffs on steel and aluminum imports, raising existing 25% tariffs to 50%. This move has had significant effects on both domestic and international steel and aluminum producers.
Impact on U.S. Domestic Steel Producers
Shares of U.S.-listed steel manufacturers have seen growth since Trump’s tariff announcement:
- Century Aluminum: Up 26.70% to $20.12 per share, the best performer among primary aluminum producers.
- United States Steel: Grew 25.24% to $53.14 per share, ranking second.
- Cleveland-Cliffs: Increased 11.14% to $7.78 per share, specializing in iron ore mining, processing, and pelletization.
- Alcoa: Up 10.22% to $28.57 per share, the third-largest global aluminum producer.
- Nucor: Rose 6.34% to $122.53 per share, producing steel products.
Trump’s executive order raised tariffs on steel and aluminum imports from 25% to 50%, deeming these sectors strategic. Since taking office in January, Trump has imposed tariffs on both allies and adversaries, disrupting global trade and financial markets.
Canada is the largest steel supplier for the U.S., followed by Brazil and Mexico. Argentina ranks sixth in aluminum supply.
Expert Analysis
Amin Vera, CFO of Invala Family Office, stated that the stock increases are “clearly due to tariffs and reflect well the implications of Trump’s trade policy, which is to create a lot of noise with few tangible results and not alter the structural environment for U.S. companies, not even those deemed priority by his own team.”
He added that short-term movements have been driven by tariffs, but overall volatility has remained low since 2021. “Price changes and demand cycles in China haven’t moved these stocks, making them mature and stable options for certain portfolios.”
Experts from Punto Casa Bolsa highlighted that U.S. steel and aluminum prices have risen, while foreign manufacturers’ stocks plummeted after Trump doubled tariffs on the metals to 50%.
They explained that “the U.S. is the largest importer of steel, excluding the EU, having purchased 26.2 million tons in 2019, according to the Department of Commerce. The premium for U.S. aluminum consumers in the physical market surged 54%, while hot-rolled steel rose 7.4%.”
As a result, U.S. steel manufacturers have benefited from these actions.
Impact on Foreign Steel Producers
Negative Effects on International Companies
Foreign-listed steel producers have experienced declines due to factors like tariff uncertainty, reduced profits, and investor reactions to political leaders’ statements.
- Nippon Steel: Down 4.07% to ¥2,876 yen, a Japanese wheel and axle manufacturer for railways.
- Algoma Steel: Dropped 3.95% to $8.03, a Canadian steel producer.
- POSCO Holdings: Decreased 0.19% to ₩258,000 won, supplying steel to South Korea’s automotive and shipbuilding industries.
- ArcelorMittal: Fell 0.15% to €26.63, the world’s largest steel company based in Luxembourg.
Impact on the Automotive Industry
The 50% tariff on steel and aluminum automotive parts will negatively affect the auto industry. According to the International Organization of Automobile Manufacturers (OICA), an average vehicle uses approximately 900 kg of steel.
- Steel provides strength and durability for vehicle longevity, with the drivetrain accounting for 23%, suspension for 12%, and wheels, fuel tank, and steering/braking systems making up 31%.
