Trump tariffs on steel and aluminum are set to hit, and possibly even harder than expected, after President Trump's executive order signed Monday evening. After strong gains during the regular session, steel and aluminum stocks kept rising after hours. Nucor and Alcoa are among stocks that jumped after Trump said U.S. imports of the metals will face a 25% tax.
Steel Dynamics and Century Aluminum are both offering entry points, with CENX tacking on big additional gains after Trump's announcement. The White House hasn't yet posted the executive order, but Bloomberg News reported that the new tariffs are much broader than the the 2018 versions, which focused on raw steelmaking and primary aluminum production. This time around, the tariffs are set to cover mid-stage products such as slabs or extrusions.
Trump has also indicated that he's poised to announce more "reciprocal" tariff measures, possibly Tuesday or Wednesday, matching tariffs currently imposed by trading partners on their imports from the U.S. Further, Trump said on Sunday that Canada and Mexico, which he gave a one-month reprieve last week, said that actions to stem fentanyl smuggling across the border are "not good enough."
Trump Tariffs On Steel, Aluminum
President Trump already imposed a 25% tariff on steel imports in 2018. However, most steel imports to the U.S. are shielded from this tax through a series of agreements with trading partners. Trump later exempted imports from the biggest source of steel imports: Canada, Brazil and Mexico. In other deals, Trump and former President Biden set quotas for the U.K., European Union, South Korea and Japan, partially shielding them from tariffs.
The new executive order apparently ends all of those exemptions and quotas, imposing the full 25% tariff on all steel imports.
Meanwhile the current 10% tax on aluminum imports is set to jump to 25%.
Stock Market Today: Futures Rise As New Tariffs Loom
Tariff Impact On Steel, Aluminum Sectors
Steel coil futures prices jumped from around $800 per ton at the close of last week to $857 per ton, close to an 11-month high. Steel industry capacity utilization has fallen to around 70% after rising above 80% after the initial imposition of Trump tariffs. That suggests plenty of excess capacity, if imports were to slow.
Brad Setser, senior fellow at the Council on Foreign Relations, posted that aluminum output is more constrained. "Imports from Canada in particular are essential for the primary aluminum market in the U.S."
Because an increase in aluminum smelting capacity "takes time and may take more than a 25% tariff," Setser sums up the impact as "short-term pain for no short-term gain."
In addition to the much-higher Trump tariff rate, Century Aluminum said it would apply to the nearly 75% of imports that entered the U.S. duty-free due to a loophole.
Nucor, Steel Dynamics, Alcoa Stocks Rise
Nucor climbed 5.65% in the regular session, then added 0.9% after hours, though it remains well below its 200-day moving average. Steel Dynamics jumped rose 4.9% to 132.87. The convincing move past its 50-day moving average flashed an early entry opportunity for STLD, which added 0.85% in late-day trading.
Cleveland-Cliffs powered up 17.9%, while U.S. Steel gained 4.8%. Trump seemed to put to rest a potential takeover of U.S. Steel by Japan's Nippon Steel on Friday, though Reuters reported there may be one final acquisition proposal.
Alcoa rose 2.2%, while Century Aluminum popped 10.2%. CENX stock retook the 50-day line and broke above a trendline in a two-month consolidation. CENX added 3.6% late Monday to 21.33. A move past 21.49 would offer another entry point from a double-bottom base.
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