Steel Tariffs Might Be on President Trump’s Radar
Earlier this year, the Trump Administration initiated a probe under Section 232 of the Trade Expansion Act of 1962 to see if steel imports threaten US national security. The move generated a sense of enthusiasm in US steel producers who see “unfairly traded” steel products as their biggest challenge.
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Markets were expecting the probe’s findings as early as the end of June, based on public statements by President Trump and Commerce Secretary Wilbur Ross. However, the probe has taken a back seat as the Trump Administration tries to push forward other agendas, especially tax reforms.
While US steel producers (SPY) (SPX-INDEX) might feel some heartburn from the delay in the Section 232 probe, especially given the rise in steel imports, which have now risen year-over-year for ten consecutive months, they haven’t lost hope. In a recent interview with Bloomberg, Nucor’s (NUE) CEO, John Ferriola, expressed optimism about the Section 232 imports probe. Ferriola said, “We remain very positive. When we met with the administration, and I’ve done it several times within the last 30 days, they say that steel is still big on the president’s mind.”
It’s important to note that the Department of Commerce has a 270-day deadline to complete the investigation. It will expire in mid-January. The US steel industry is trying to keep the flames alive. In August, companies including U.S. Steel Corporation (X) and ArcelorMittal (MT) wrote a letter to President Trump requesting urgent action. The United Steelworkers Union also urged the Trump Administration to act against steel imports (AKS).
In the next part, we’ll see how US steel prices could play out in 4Q17.