US Steel Stocks Fall Two Years after Trump’s Tariffs

  • In 2018, President Trump imposed Section 232 tariffs on US steel and aluminum imports. The tariffs came into effect two years ago this month.
  • However, all of the leading US steel stocks are trading way below the price levels when the tariffs were announced. While domestic mills hailed Trump’s Section 232 tariffs as a savior, macro weakness has taken a toll on the metals and mining sector.

US steel stocks

So far, 2020 has been dismal for US steel stocks. Based on Monday’s closing prices, U.S. Steel Corporation (NYSE:X), Nucor (NYSE:NUE), and Cleveland-Cliffs (NYSE:CLF) have lost 28%, 24%, and 29%, respectively. This year’s price action might be due to the coronavirus. However, the sector didn’t perform well in 2018 or 2019 either. Last year, all of the leading US steel stocks underperformed the S&P 500. Meanwhile, stocks like X lost almost 50% in 2018. Other leading steel stocks also closed with massive losses in 2018.

Trump’s Section 232 tariffs

In March 2018, President Trump imposed a 25% tariff on US steel imports under Section 232 of the Trade Expansion Act of 1962. He imposed the tariffs on national security grounds. The Department of Commerce’s findings showed that steel imports threaten US national security. Domestic mills hailed President Trump’s Section 232 tariffs and announced a flurry of new investments and plant restarts. President Trump also imposed a 10% tariff on US aluminum imports. However, in the aluminum sector, only Century Aluminum announced the restarted of one of its idled smelters.

Tariffs and US steel stocks

President Trump announced the tariffs on March 8, 2018. The tariffs came into effect later that month. However, markets don’t seem to believe that the tariffs are a savior for US steel stocks. Between March 7, 2018, and March 2, 2020, X, Nucor, and Cleveland-Cliffs have fallen 82%, 38%, and 25%, respectively. Notably, the statistics might not portray the correct picture. US steel stocks did rally in February 2018 in anticipation of the tariffs. Last month, X stock almost fell to its all-time low, while other steel stocks are trading near multiyear lows.

There has been a slump in the global metal and mining industry. Metal prices are sagging near multiyear lows. US steel prices rose swiftly in the first half of 2018 but have fallen sharply since then. China’s slowdown and the US-China trade war hit the sector in 2018 and 2019. Now, coronavirus fears have struck the metals and mining industry. Meanwhile, President Trump’s tariffs haven’t been an outright failure. Read Have Trump’s Steel Tariffs Failed? to learn more.