Section 232 tariffs
President Donald Trump has imposed a tariff of 25% on all steel imports, acting on the recommendations of the U.S. Department of Commerce’s Section 232 investigation. The probe was initiated last year to determine whether steel imports threaten US national security.
While Trump had initially indicated that there would be no country-wise exemptions from the tariffs, Mexico, Canada, and Australia are not included in the tariffs. Trump also left the door open for more exemptions in the future.
US steel prices, which were already on an uptrend this year, shot through the roof to multiyear highs after Trump imposed these tariffs. However, as the tariffs were a toned-down version of his previous no-exemption stance, we saw some sell-off trends in steel stocks.
Looking at the year-to-date price action, U.S. Steel Corporation (X) and Steel Dynamics (STLD) have respectively gained 9.2% and 7.6% this year based on their March 16 closing prices. AK Steel (AKS) has lost 12.9% while ArcelorMittal (MT) is trading almost flat over the period.
The SPDR S&P Metals and Mining ETF (XME), which invests in US-based metals and mining companies, is down 0.44% so far in 2018.
In this series, we’ll see how analysts view steel stocks after the Section 232 tariffs. We’ll also see how brokerages have changed their views on steel companies recently. Let’s begin by looking at U.S. Steel’s ratings and target prices.