Trump’s Tariff Hike Boosts U.S. Steel and Aluminum Stocks
On February 10, 2025, President Donald Trump announced a new round of tariffs on steel and aluminum imports, reinstating a policy initially introduced in 2018. During his first term, Trump imposed a 25% tariff on steel and a 10% tariff on aluminum. Under the updated policy, both tariffs will be raised to 25%, with no exemptions, unlike the previous tariffs which included some exceptions. The new tariffs will take effect on March 4, 2025.
This announcement presents opportunities for U.S. companies involved in steel and aluminum production, particularly those benefiting from increased demand for domestically produced metals. The tariffs are expected to make foreign imports more expensive, thereby boosting demand for U.S.-made materials.
Steel and Aluminum Stocks to Watch
The clear beneficiaries of these tariffs are domestic steel and aluminum producers, as the primary aim is to raise demand for U.S.-manufactured metals by making imports pricier. Nucor Corporation ($NUE), the largest steel producer in the U.S., saw its stock rise by 5.6% following the announcement. Other major steel companies also saw gains, including United States Steel Corporation ($X), which specializes in automotive, construction, and industrial products, with a 4.7% increase in its stock price. The biggest winner of the day was Cleveland-Cliffs Inc. ($CLF), which became a major player after acquiring ArcelorMittal USA, jumping 18% in a single day of trading.
In the aluminum sector, Century Aluminum Corporation ($CENX), a leading producer of primary aluminum for industries like aerospace and automotive, saw the biggest surge, with its stock climbing over 10%. It was followed by Kaiser Aluminum Corporation ($KALU) and Alcoa Corporation ($AA), which posted smaller gains of 2.4% and 2.2%, respectively.
This rally reflects investor optimism that the tariffs will drive up U.S. steel and aluminum prices, providing a boost to domestic manufacturers while shielding them from foreign competition.
Here is the full list of major U.S. steel and aluminum manufacturers and their stock price reactions to Trump’s tariffs announcement:
Effects on Other Industries
- Manufacturing: Many manufacturing sectors depend heavily on steel and aluminum to produce their products. Industries like truck production, appliance manufacturing, and construction machinery are seeing shifts in their sourcing strategies. For example, Caterpillar Inc. ($CAT), a leading manufacturer of construction equipment, may look to increase its use of domestically produced steel and aluminum to avoid higher costs from imported materials. However, manufacturers might face higher costs and potential supply chain bottlenecks as they seek to secure enough domestically produced metals to meet their needs. Companies like Whirlpool ($WHR), which uses steel in the production of household appliances, could face increased production costs, which may be passed down to consumers.
- Automotive: The automotive industry, which relies heavily on steel and aluminum for vehicle production, might also faces an impact from the new tariffs. Automakers like General Motors ($GM) and Ford ($F) may face higher production costs due to the increased prices of steel and aluminum, which are integral to car manufacturing. Steel is used in vehicle frames, body panels, and engines, while aluminum is commonly used in parts that reduce weight and improve fuel efficiency.
- Aerospace and Defense: The aerospace and defense industries also rely on high-quality steel and aluminum in the production of aircraft and defense equipment like Boeing ($BA, Lockheed Martin ($LMT) and Northrop Grumman ($NOC), could also be impacted by potentially higher material costs.
The stocks mentioned above haven’t seen significant price action following the tariffs announcement, suggesting limited investor concern about potential increased costs.This article is for informational purposes only and is not investment advice or a solicitation to buy or sell securities. The content is based on publicly available information and reflects the author’s opinions as of the publication date, which may change without notice. All investments carry inherent risks, including the potential loss of principal, and past performance is not indicative of future results. Readers should conduct their own research or consult a financial advisor before making investment decisions. BBAE holds no position in the securities mentioned, nor are they compensated by the companies mentioned.
