The tariff tit-for-tat spat has escalated yet again: This time, President Trump threatened to raise duties on Canadian steel and aluminum imports by an extra 25%, bringing the total up to 50%.
This punishing new levy was announced after Ontario Premier Doug Ford trotted out his own retaliatory tariff against Trump—specifically, a 25% surcharge on electricity exports to the US.
But by the end of the trading session these tariff talks had completely reversed course: Ford declared that he will not raise electricity prices, presumably in exchange for the original 25% tariffs Trump has promised—though as of the end of the trading day, the White House had not pulled back on additional tariffs.
After yet another day of tariff whiplash, one set of levies that’s about to go into effect may have slipped under the radar: The US will impose a 25% tariff on steel and aluminum imports from the EU beginning tomorrow. So, what does all this tariff talk mean for metals?
Will tariffs help US steel and aluminum?
Although Trump’s protectionist policies have rocked markets and stoked fears of a recession, domestic manufacturers of steel and aluminum really have been undercut by cheaper Canadian imports for years.
“No matter how low we bid, they can underbid us on any job,” Capone Iron Corporation President Stephen Capone told the New York Times. “They’re decimating our market.”
Now, shielded from lowballers outside our borders, American steel and aluminum could be poised to pop. Although it’s far too soon to gauge the full extent of the impact on trade dynamics and profit margins, for today at least, this sector enjoyed a nice bump:
- The NYSE American Steel Index rose 2.12%, while shares of US Steel climbed 5.33%, Nucor gained 2.53%, and Steel Dynamics rose 1.14%. ETFs like the VanEck Steel ETF also rose by 1.72%.
- The price of aluminum popped then dropped 0.23%, while shares of Alcoa gained 3.13%, and Century Aluminum climbed 9.13%.
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Odds are, this trend will continue.
“These tariffs might have some positive impact on metals firms since major new barriers on the nearest foreign supplier will naturally make domestic alternatives more desirable,” noted Senior Fellow at the New Hegemony Institute John C. Engle. “With such a potential competitive advantage, one would expect some tailwinds for the stock prices of domestic steel and aluminum producers.”
Still, today’s rally might not fly as high as some hope because, as today proved all too well, tariffs can change on a dime.
“When tariffs are imposed, lifted, then imposed again, as has been the case over the past few months, economic actors struggle to react effectively,” Engle explained. “Hence why the market as a whole is reacting negatively, and why even those sectors ostensibly set to benefit from higher tariffs aren't rallying much.”
Another possibility, of course, is that we will face even more retaliatory tariffs from our neighbors, and more from Trump, and on and on it goes until we finally get so tired of them that we ban the word “tariffs” from the newsletter.—JD