It’s rare to see agreement between two totally different American Presidents, but both Joe Biden and Donald Trump agreed on one thing — levies on Chinese metals. During his first administration, Trump imposed tariffs on Chinese imports of steel and aluminum, which the Biden administration had considered expanding, calling them “strategic and targeted actions” to protect American workers. However, this is where the two have diverged.

Pedal to the metals: In the first 52 days of Trump’s revenge tour, his administration has teased, scheduled, and walked back more tariffs than it has passed so far. But soon, that could be changing. Yesterday, after some last-minute capitulation, the Trump administration boosted import taxes on all aluminum and steel to 25%. The trade levies and the escalation in an ongoing trade war have come after years of decimation for domestic aluminum and steel producers — which suffered from cheaper global competition, electricity costs, and other factors. The efforts could bolster steelmakers and incentivize the creation of new ones.

• In 2020, America’s aluminum industry production fell to its lowest level since 1950, with just four smelters left in the US — Canada has since become the largest US supplier of primary aluminum consumption.
• America has become the second-largest importer of steel, relying on 79 different countries in 2023 to meet consumption — which has far outstripped domestic production.

Who Wins?

The new tariffs have boosted the price of aluminum and steel to new highs, with the impacts expected to harm companies throughout the rest of the supply chain. However, for metal producers and processors, higher prices have been mostly good for their stocks.

• America’s largest steel producers, NucorNUE
  , US SteelX
  , and Cleveland-Cliffs, are up 15.7%, 17.9%, and 3%, respectively, since the start of the year — outstripping the 4% decline in the S&P 500.
• Leading aluminum manufacturers like AlcoaAA
  have warned that the trade penalties could cost 100K jobs, falling 12% year-to-date — while competitor Century AluminumCENX
  has risen 8.7%.

The response: Even abroad, foreign producers like BlueScope, SSAB, and Acerinox have benefited from higher prices, making them “unlikely winners” per FT. And so long as the tariffs are in effect, higher prices on steel and aluminum might be a given — and coming to other commodity markets like lumber. In response to the new tariffs, both the EU and Canada have announced new retaliatory tariffs — taking aim at everything from bourbon to computers to jeans.