Why Donald Trump Could Be a Game Changer for US Steel Companies

Donald Trump

The United States is now gearing up for Donald Trump to take oath as its 45th President. Although Donald Trump’s victory sparked an initial selling spree on the Wall Street, markets recovered handsomely, and while investors in different sectors are contemplating what Trump’s presidency could mean for their investments, steel investors have no such worries—not for now, at least.

Why Donald Trump Could Be a Game Changer for US Steel Companies

Trump’s views

Trump’s views on most economic issues find close resonance with US steel companies. Trump appears to favor a more aggressive trade policy, regularly citing job losses as a result of imports from other countries, especially China. Steel giants U.S. Steel (X), ArcelorMittal (MT), and AK Steel (AKS) frequently list “unfairly traded steel products” as the biggest challenge for the US steel industry. Notably, Nucor’s (NUE) former Chief Executive Officer, Dan DiMicco, is among Trump’s economic advisors.

It’s no wonder that steel companies saw a sharp upward price action on November 9, the day after the election. U.S. Steel and AK Steel rose 17.2% and 13.9%, respectively, and the SPDR S&P Metals and Mining ETF (XME), which seeks to invest a diversified portfolio of US-based steel companies, saw an upward price action of 7.7% the same day.

Series overview

In this series, we’ll analyze how steel stocks could play out under Donald Trump’s presidency. We’ll look at the short-term and long-term impacts of Trump’s publicly stated economic policies toward US steelmakers, and we’ll examine the key challenges Trump could face in implementing his agenda.

Let’s begin by analyzing the short-term impact that Trump could have on the US steel industry.