Steel and aluminum are next in line for Trump tariffs, but there's much more to come, likely this week, President Trump said Sunday. Nucor (NUE) and Alcoa (AA) are among stocks jumping early after Trump said U.S. imports of the metals will face a 25% tax. Steel Dynamics (STLD) and Century Aluminum (CENX) could offer early entries.
Trump also indicated that he's poised to announce more "reciprocal" tariff measures, possibly Tuesday or Wednesday, matching tariffs currently imposed by trading partners on their imports from the U.S. Further, Trump said that Canada and Mexico, which he gave a one-month reprieve last week, said that actions to stem fentanyl smuggling across the border are "not good enough."
↑ X NOW PLAYING Trump Tariffs Are Central To President's Policy Shake-Up Promises. Here's What Markets Are Watching.President Trump already imposed a 25% tariff on steel imports in 2018. However, most steel imports to the U.S. are shielded from this tax through a series of agreements with trading partners. Trump later exempted imports from the biggest source of steel imports: Canada, Brazil and Mexico. In other deals, Trump and former President Biden set quotas for the U.K., European Union, South Korea and Japan, partially shielding them from tariffs.
While details are still to come, the implication of all steel imports facing a 25% tariff is that these exemptions and quotas would be scrapped.
Meanwhile the current 10% tax on aluminum imports looks set to jump to 25%.
Stock Market Today: Futures Rise As New Tariffs Loom
Steel coil futures prices jumped 6.8% to $865 per ton, close to an 11-month high. Steel industry capacity utilization has fallen to around 70% after rising above 80% after the initial imposition of Trump tariffs. That suggests plenty of excess capacity, if imports were to slow.
Brad Setser, senior fellow at the Council on Foreign Relations, posted that aluminum output is more constrained. "Imports from Canada in particular are essential for the primary aluminum market in the U.S."
Because an increase in aluminum smelting capacity "takes time and may take more than a 25% tariff," Setser sums up the impact as "short-term pain for no short-term gain."
Nucor is among the biggest S&P 500 movers in early Monday stock market action, rising 8.2%, though it's still set to open below its 200-day moving average. Steel Dynamics jumped 6.2%, flashing an early entry with the convincing move past its 50-day moving average.
Cleveland-Cliffs (CLF) leapt 8% and U.S. Steel (X) 3.9%. Trump seemed to put to rest a potential takeover of U.S. Steel by Japan's Nippon Steel, though Reuters reported there may be one final acquisition proposal.
Alcoa rose 5.6%, while Century Aluminum (CENX) popped 5.9%. CENX stock is set to retake the 50-day line and break a trendline in a two-month consolidation with 21.49 as another potential short-term entry.
If Trump delays, modifies or reverses the new steel and aluminum tariffs, these stocks could tumble in an instant.
Be sure to read IBD's The Big Picture column after each trading day to get the latest on the prevailing stock market trend and what it means for your trading decisions.
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