Trump's 25% Tariffs On Steel And Aluminum Imports Take Effect: US Steel, Nucor, Century Aluminum And Other Domestic Stocks Cheer - Alcoa (NYSE:AA), Century Aluminum (NASDAQ:CENX)

The 25% tariffs on steel and aluminum imports imposed by U.S. President Donald Trump have now taken effect, triggering a swift retaliation from the European Union.

What Happened: The tariffs were enforced on Wednesday, impacting several countries including Canada, Australia, and the EU. The White House issued confirmation about the duties late Tuesday but also revealed that Trump had abandoned plans to increase tariffs on Canadian metals to 50%, reported CNBC.

In response, the European Union announced counter-tariffs on $28.33 billion worth of U.S. goods beginning in April. The European Commission stated that these measures aim to “protect European businesses, workers and consumers from the impact of these unjustified trade restrictions.”

Meanwhile, Australian Prime Minister Anthony Albanese criticized Trump’s move as “entirely unjustified,” adding that Australia will refrain from imposing reciprocal tariffs on U.S. imports to prevent price inflation for Australian consumers.

Why It Matters: This development marks another chapter in the ongoing trade war, characterized by Trump’s bold tariff promises and subsequent reversals. The trade tensions have recently rattled markets, amid intensifying concerns that the tariffs could edge the world’s largest economy towards a recession.

Furthermore, Trump’s decision to scrap plans to hike tariffs on Canadian metals to 50% came after Ontario paused a 25% tax on electricity exports to the U.S. This indicates a complex and rapidly evolving situation, with decisions being made and reversed in quick succession, adding to the uncertainty in global markets.

That being said, some of the domestic industry bodies hail the President’s move. American Iron and Steel Institute (AISI), representing U.S. steelmakers, supported the tariffs, stating they would generate jobs and strengthen domestic steel production, reported BBC. Furthermore, Jesse Gary, the CEO of Century Aluminum told the New York Times, "The new tariffs will close those loopholes back up and enable us to begin investing again, and bring on more production here in the U.S."

On the flipside, Bill Reinsch, a former Commerce Department official told BBC, “It protects [the steel and aluminium] industries but hurts downstream users of their products by making them more expensive.”

The shares of domestic steelmakers, United States Steel Corp X and Nucor Corporation NUE climbed more than 13% year to date, as per Benzinga Pro. Meanwhile, Aluminum stocks Alcoa Corp. AA and Century Aluminum Co. CENX closed the last session with gains of 3% and 9%, respectively.