President Trump’s Tariffs: So Far So Good



President Trump’s tariffs

This year, frictions between the United States and its trade partners have escalated. In January, the Trump Administration imposed duties against washing machine and solar panel imports. It was followed in March by the Section 232 tariffs on steel and aluminum imports. Then in May, President Trump put Section 232 tariffs on European Union and NAFTA (North American Free Trade Agreement) steel and aluminum imports. But these regions were exempt from the tariffs pending the negotiations for long-term exemptions. Now, the Commerce Department is investigating the national security implications of automotive imports.

So far so good

Critics of President Trump’s tariffs point to the possible negative impact on US consumers and on industries that use steel and aluminum.

On the other hand, US steel and aluminum producers, including Nucor (NUE) and Steel Dynamics (STLD), are enjoying higher margins. Piggybacking on Trump’s tariffs are plant restarts by some of these producers. U.S. Steel Corporation (X), which announced the restart of one of its blast furnaces at its Granite City plant in March, announced on June 5 that it is restarting another blast furnace at the same site.

Century Aluminum (CENX) has also announced a plant restart after the Section 232 tariffs raised US Midwest aluminum physical delivery premiums. Nucor (NUE) has also announced a new plant.

The broader markets have recently recouped their losses. While the SPDR S&P 500 is still off its 2018 highs, Nasdaq hit a new high on June 5. The PowerShares QQQ ETF (QQQ) has outperformed the broader market indexes this year.

Unemployment levels have also fallen to multiyear lows. In the next part, we’ll take a closer look at President Trump’s tariffs.

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