US steel and aluminum stocks surged on Wednesday, despite President Donald Trump deciding not to move forward with additional tariffs on Canadian imports.
The rally comes after Trump initially proposed extra tariffs in response to Ontario’s 25% surcharge on power to Americans. However, the province backed down after the US president threatened to increase tariffs on steel and aluminum to 50%.
While the additional tariffs were avoided, the original 25% tariffs on steel and aluminum remain in place, boosting US metal stocks.
United States Steel Corporation (NYSE:X) rose 0.2% to $37.135, while Alcoa (NYSE:AA) gained 3%, reaching $32.92.
Home field advantages
The continued strength in metal stocks comes as the tariffs provide a boost to domestic mills, leading to price increases that could support US producers.
The US remains a net importer of steel and aluminum, making it vulnerable to fluctuations in global supply chains. However, the tariffs provide a boost to domestic mills, leading to price increases that could support US producers.
In related trade developments, Trump also removed exemptions from the 2018 tariffs on metals and raised the aluminum tariff from 10% to 25%. In retaliation, the European Union (EU) imposed new duties on US industrial and farm products, covering about $26 billion in US exports.
EU President Ursula von der Leyen voiced concerns over the tariffs, describing them as harmful to both businesses and consumers, disrupting supply chains, and contributing to rising prices.
The US stock market showed mixed performance on Wednesday, following a recent streak of declines amid ongoing trade disputes, tariff tensions, and corporate job cuts.
The announcement of steel and aluminum tariffs coincided with economic data showing lower gas prices easing inflation in February. However, economists expect the relief to be short-lived, with JP Morgan's chief economist estimating a 40% chance of a US recession this year.