Trump's Metal Tariffs Set Stage For US Steel ETF Gains

The latest round of tariffs on metal imports, announced by the Trump administration, is set to create significant investment opportunities in ETFs focused on U.S. steelmakers.

With a 25% tariff now set to be imposed on all steel and aluminum imports, domestic steel producers are expected to gain market share and see rising profitability. A KeyBanc Capital Markets report shows how these tariffs could reshape the steel market, reducing finished steel imports by 14% year-over-year in 2025, primarily impacting sheet and plate steel.

Analysts anticipate U.S. steel mills capturing market share previously held by foreign competitors, reinforcing the bullish outlook for U.S. steel companies-focused ETFs.

Three standout ETFs are VanEck Steel ETF SLX, SPDR S&P Metals & Mining ETF XME, and Global X U.S. Infrastructure Development ETF PAVE.

VanEck Steel ETF

This is a direct play on the steel sector, offering concentrated exposure to leading steel manufacturers. With holdings in Nucor NUE, Cleveland-Cliffs CLF, Steel Dynamics STLD, and United States Steel Corp X, the fund is well-positioned to benefit from higher domestic steel prices.

The new tariffs are expected to curb foreign steel imports, which accounted for a substantial share of the U.S. market. This will increase demand for domestically produced steel, boosting revenue for companies within SLX’s portfolio.

As steel prices rise, profit margins for U.S. steel producers will expand, which might be a boost for stock valuations.

Also Read: Trump’s 25% Tarrifs A ‘Self-Inflicted Wound,’ Says Economist Amid Warnings Of Fewer American Jobs — Peter Schiff Says You’ll Pay More For Cars And Homes

SPDR S&P Metals & Mining ETF

XME provides broader exposure to the metals and mining sector but is still heavily weighted toward steel stocks like Steel Dynamics, Nucor and United States Steel Corp.

The tariff-induced price hikes on imported steel will force industries relying on metal, such as construction, automotive, and energy, to turn to U.S.-based suppliers. Steel Dynamics, Cleveland-Cliffs, and Nucor stand to gain from increased domestic sales, while higher scrap prices further support pricing power.

Global X U.S. Infrastructure Development ETF

PAVE is a more diversified play, offering exposure to the broader infrastructure sector, which is a major consumer of steel. Infrastructure companies like Trane Technologies TT and Eaton Corp ETN are part of the ETF’s portfolio.

With increased steel demand for construction projects and infrastructure spending, U.S. steel producers will see long-term growth.

Supply And Demand Shift

KeyBanc projects U.S. real carbon steel demand to grow by around 2% in 2025 (compared to a 1-2% decline in 2024), supported by rebounds in oil & gas, industrial, and construction sectors. Moreover, Hot Rolled Coil (HRC) prices are expected to rise from $750 per ton to $810 per ton in 2025, buoyed by tariff-driven demand shifts and rising scrap prices.

KeyBanc analysts also upgraded Steel Dynamics to Overweight, citing improved operational efficiencies and pricing tailwinds.

The Trump administration's aggressive trade stance is designed to protect U.S. steelmakers from cheap foreign imports. KeyBanc said that analysts anticipate a boost in domestic steel production, with sector utilization rising to 78% in 2025.

Earnings Growth for Steel Stocks

Steel Dynamics: KeyBanc raised the estimated 2025 EBITDA to $2.57 billion from $2.13 billion, driven by higher utilization and rising steel prices.

Cleveland-Cliffs: The research firm raised EBITDA expectation to $1.034 billion amid improved demand for U.S.-made steel.

Nucor: Holding a Sector Weight rating, NUE's diversified steel operations make it a stable long-term play.

Parting Thoughts

The tariffs are set to create a favorable market for domestic steelmakers, and ETFs with significant exposure to U.S. steel stocks stand to gain. With KeyBanc's bullish outlook on steel demand and pricing, the ETFs discussed in this piece could see substantial upside in the months ahead.

Read Next: