US Steel, Aluminum Stocks Rally After Commerce Dept. Calls For Tariffs

Steel and aluminum stocks moved sharply higher Friday after the U.S. Commerce Department issued a recommendation to President Donald Trump to enact steep tariffs or quotas on foreign companies.

What You Need To Know

Trump's administration looked into the topic of steel and aluminum imports and any potential impact on natural security, CNBC reported. Steel imports are "weakening our internal economy" and pose a threat to national security, Commerce Secretary Wilbur Ross said in a Friday letter. 

Ross recommends the White House take "immediate action by adjusting the level of imports through quotas or tariffs."

Why It's Important

The report calls for a global tariff of 24 percent on all steel imports, with another option calling for a tariff of at least 53 percent on steel coming from a dozen countries including Brazil and China, CNBC said. Ross recommended a 63-percent quota of the countries' 2017 imports. 

The report also calls for a 7.7-percent tariff on all imported aluminum for most countries, but a higher rate of 23.5 percent on aluminum products from China, Hong Kong, Russia, Venezuela and Vietnam. A higher quota of 86.7 percent was recommended in the aluminum report.

What's Next?

The White House would be able to exempt certain countries from a tariff or quota, and individual companies can seek an appeal if they have any U.S. production facilities. U.S. steel producers should be able to operate at 80-percent average capacity utilization rates or better based on the available capacity that existed in 2017 if action is taken against foreign companies, Ross said. 

Stock Reactions

• AK Steel Holding Corporation AKS gained more than 12 percent.
• United States Steel Corporation X gained more than 10 percent and hit a new 52-week high of $43.97.
• Century Aluminum Co CENX gained 8 percent.
• Steel Dynamics, Inc. STLD gained 4 percent.
• Nucor Corporation NUE gained 4 percent.
• Alcoa Corp AA gained 0.6 percent.

Related Links:

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Steel Industry Assures Of Its Importance In Autos, Sustainable Client Base At NAIAS

Photo by Walter T. Palmer/via Wikimedia.