Section 232 exemptions

Last week, the Trump administration announced Section 232 exemptions for steel and aluminum imports from Canada and Mexico. The exemption was long expected, as both Canada and Mexico were adamant about their demand for an exemption, and had apparently linked it to USMCA. A lack of quota could be seen as a victory for Canada and Mexico, as the Trump administration was trying to push for a quota for Section 232 exemption.

Steel Tariff Exemptions: Will Safeguards Be Enough?

Canada and Mexico

Canada and Mexico are the top two steel exporters to the United States and together accounted for a little over 26% of total US steel imports in the first quarter. After a complete exemption for Canada and Mexico, steel imports rise from these countries. The argument looks particularly strong given the fact that US steel prices are still quite high as compared to global steel prices. The spreads between US and international steel prices are the key driver of US steel imports.

Safeguards

To be sure, the United States has tried to incorporate some safeguard measures while granting Section 232 exemptions for Canada and Mexico. The joint statement has talked about measures to prevent transshipments and monitor any surge in imports after the exemption. While these measures look positive, steel imports from Canada and Mexico could still rise.

The year started on a positive note for steel stocks, but they have come under pressure in the second quarter. U.S. Steel (X), AK Steel (AKS), and Nucor (NUE) have lost 24.9%, 14.2%, and 8.7%, respectively, in the second quarter. Cleveland-Cliffs (CLF) is almost flat for the quarter.

Latest articles

Apple Arcade (AAPL) is a subscription gaming service that was unveiled at Apple’s annual event last week. The service will launch on September 19.

Cannabis legalization is gaining traction not only in the US but also globally. The third presidential Democratic debate was held on September 12.

Google has agreed to make a one-time settlement of over $945 million euros to the French ministry. The ministry accused Google of evading taxes.

In Q4 2018, legendary investor George Soros sold all his holding in Apple (AAPL). In Q3 2018, Apple represented around 0.2% of his total portfolio.

Jim Chanos, the founder and president of Kynikos Associates, is a long-time short-seller of Tesla stock. Tesla stock has fallen 17.5% in the last year.

Despite Aurora Cannabis's subdued results, Cowen initiated coverage on five cannabis stocks: CRLBF, GTBIF, CURLF, MMNFF, and ACRGF.