US steelmakers are expected to benefit from President Donald Trump’s new tariffs on imports from Mexico and Canada, but Wall Street warns that longer-term headwinds threaten the industry.
The 25% tariff on Mexican imports and 10% levy on Chinese imports will make foreign steel more expensive in the US. US companies hope this will boost domestic production and allow them to raise prices.
However, analysts at Morgan Stanley, UBS, and Bank of America Securities caution that lower demand and capacity additions may offset the gains. “Longer term, we see downside risk to the US steel stocks from the potential for materially reduced auto production,” said Lawson Winder at Bank of America Securities.
The industry has been battling cheap foreign imports for years, with companies like Nucor CEO Leon Topalian citing illegal dumping and currency manipulation as major concerns. The top steel exporters into the US, Canada and Mexico, were initially targeted in Trump’s first tariffs but eventually reached a trade deal that included an exemption.
Analysts project modest steel demand growth of 1.6% and warn that prices will be tempered by limited growth. While some companies, like Nucor, are benefiting from the tariffs, others, such as US Steel, may see their shares downgraded due to reduced prospects for meaningful upside.
Source: https://www.cnbc.com/2025/02/03/steelmakers-may-benefit-from-trump-trade-salvos-wall-street-says-.html