Exploring U.S. Steel’s Outlook amid Toned-Down Tariffs
President Donald Trump has imposed flat tariffs of 25% on all steel imports and 10% on aluminum imports. These tariffs will exist in addition to any trade barriers already in place.
While initially, President Trump indicated that no countries would be exempt from the tariffs, Canada and Mexico are now exempt from the current duties. President Trump has also left room for more exemptions in the future.
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The tariffs proposed by President Trump are a toned-down version of his previous stance, in which no country exemptions were proposed. Although steel companies such as Nucor have welcomed the tariffs, there was a sell-off in the steel market after President Trump formally announced them.
AK Steel (AKS) stock closed at a fall of 4.1% on March 8, 2018, while U.S. Steel Corporation (X) and Nucor (NUE) fell 2.9% and 2.6%, respectively, on the same day. The sell-off continued on March 9, and US steel stocks (XME) (CLF) saw selling pressures.
US steel producers see unfairly traded steel products as their major challenge. However, despite the several trade measures that are in place, US steel imports have refused to die down. Given the stringent tariffs, the US Department of Commerce expects US steel production and capacity utilization to rise from their current levels.
In this series, we’ll look at U.S. Steel’s outlook following the imposition of the US tariffs. We’ll also see how the tariffs could affect US steel prices. Let’s begin by looking at U.S. Steel’s valuation in the next article.