Shares of US Steel jumped more than 5% early Monday after President Donald Trump reportedly told confidants he wants a 24% tax on imported steel and another 10% on aluminum imports.
Three people familiar with the matter told Bloomberg’s Jennifer Jacobs the president prefers this option, the most heavy-handed of three presented to him by the Commerce department last month, as a way to protect national security.
It could also help spur jobs in states like Pennsylvania, home to many of the US's largest metals producers including US Steel and Alcoa, which Trump won on promises of revitalizing manufacturing. Kentucky-based Century Aluminum will likely rehire some 350 workers to bring its plant back back to full production capacity from the current two-fifths levels if new tariffs spur demand as promised, CEO Michael Bless told Reuters last week.
But the move could also increase tensions between the US and countries from which it imports steel and aluminum, especially China, whose steel production skyrocketed from just 127.2 million tons in 2000 to 806.7 million in 2016, according to the World Steel Association.
Raising steel tariffs is something "other countries could easily follow,” Nomura analyst Jordan Rochester said in a note to clients last week. It would be an action that no country has crossed since World War II, opening the way to a trade war."
Trump has until April 11 for a decision on the new steel tariffs, and April 16 for aluminum.
Shares of US steel are up 15% in the last 12 months, jumping more than 28% since the possible tariffs were first weighed by the White House earlier this month.
Sources : Business Insider