Trump’s steel, aluminum tariffs plan sees non-US metal stocks fall and US steel stocks rise

Trump’s latest tariffs on steel and aluminum are roiling global metals markets: US President Donald Trump’s Sunday announcement that he would impose 25% tariffs on steel and aluminum imports fueled a rally in US steel stocks yet spurred their Asian and European counterparts into the red as markets took measure of how the new tariffs will impact inflation, global growth, and trade flow.

Which countries will be most impacted? The tariffs will apply to all steel and aluminum producers without exception — a shift from Trump’s first term, which saw him eventually grant Mexico and Canada exemptions from his 25% tariff on steel and 10% tariff on aluminum. Sunday’s decision will particularly impact key US metal suppliers in Canada, Mexico, Brazil, Japan, the EU, South Korea, Vietnam, and Taiwan, with more tariffs expected to follow as trade partners impose retaliatory tariffs.

Metal stocks rally in the US, fall elsewhere: US steel manufacturers saw their shares get a significant bump during Monday trading as much of the rest of the world’s steel manufacturers saw their share prices slip. The US’ largest steelmaker Nucor closed yesterday up 5.6%, while Cleveland-Cliffs saw gains of 18%, and Steel Dynamics (5%), Century Aluminum (10%), and US Steel (5%) all closed in the green yesterday.

Meanwhile, European and Asian steelmakers without operations in the US saw their shares slip up to 2.5% on Monday, with most steel and aluminum producers trending flat or registering losses. The only exceptions to the trend were non-US steelmakers with significant operations in the US, with Australia’s steelmaker BlueScope logging a two-month high as investors bet on hopes that the company’s US operations would benefit from the tariffs.

Expect more steel manufacturers to set up shop in the US: Steel producers are reportedly making plans to bring their supply chains to the US to reduce costs ahead of the tariffs, with the world’s largest steelmaker ArcelorMittal and South Korea’s Hyundai Steel among the companies getting ready to establish plants stateside.

That target doesn’t seem to be China this time: Despite China’s position as the world’s largest steel producer and exporter, the country has largely been shut out of the US market since Trump imposed 25% tariffs on imported steel in 2018 — leaving it with little to lose from this newest round of tariffs. However, Beijing is currently facing 10% US tariffs on Chinese imports, with markets watching closely for signs of escalation or a potential agreement.

The tariffs aren’t necessarily good news for US manufacturers, particularly those in industries reliant on imported steel and aluminum who will now face higher prices for the 25% of the country’s steel imports. “US manufacturers will have to wear higher prices as a result of these 25% tariffs,” Australian and New Zealand Bank’s Commodities Strategist Daniel Hynes told Reuters.

Trump’s latest move is rekindling concerns over whether the unfolding trade war will push inflation higher or drag down global growth. European Central Bank Vice President Luis de Guindos noted that tariffs constitute a “supply shock” that will hit global economic growth hard. “The impact on inflation is much less clear,” de Guindos said. “If you have a fall in economic activity, then immediately that tempers the evolution of inflationary tensions.”

Analysts are penciling in continued market uncertainty for the foreseeable future as the cumulative effect of Trump’s tariffs gradually becomes clear. “Trade War 2.0 is different in scope and implementation from Trade War 1.0 in 2018 as it involves more countries … [and] includes all US major trading partners that have significant trade surpluses with the US,” forex and crypto trading firm Oanda’s Kelvin Wong told Reuters. “All in all, [it] may upend global trade flows that in turn dampen global economic growth prospects, which may lead to a stagflation environment” not seen since the global recession of 2009.

MARKETS THIS MORNING-

Asian markets are mixed in early trading this morning — the Shanghai Composite is down 0.2%, the Hang Seng is up 0.3%, while the Kospi is looking at gains of 0.5%.

THE CLOSING BELL: TADAWUL-

The TASI was flat yesterday on turnover of SAR 5.9 bn. The index is up 3.6% YTD.

In the green: Albabtain (+4.4%), East Pipes (+3.8%) and MCDC (+3.5%).

In the red: Alyamamah Steel (-6.3%), SFICO (-5.3%) and Leejam Sports (-4.8%).

THE CLOSING BELL: NOMU-

The NomuC was flat yesterday on turnover of SAR 77 mn. The index is down 0.2% YTD.

In the green: FAD (+15.8%), Alwasail Industrial (+9.4%) and Pan Gulf (+6.3%).

In the red: Aldawliah (-9.3%), WSM (-7.3%) and Quara (-5.2%).

CORPORATE ACTIONS-

#1- Saudi Fisheries Company’s board recommended a capital hike to SAR 334.9 mn through a rights issue, it said in a disclosure to Tadawul. The company has yet to appoint a financial advisor and secure shareholders and regulatory approvals.

#2- Alkhabeer Capital is distributing SAR 8.3 mn in dividends to unitholders of its Diversified Income Traded Fund 2030 for the period between 17 July to 31 December 2024 at SAR 0.27 per unit, it said in a disclosure to Tadawul. Distributions will take place within 10 days of the entitlement date on Monday, 17 February.

#3- Tadawul-listed Raoom Trading’s BoD recommended doubling the firm’s capital to SAR 125 mn by granting bonus shares to shareholders, at a rate of one bonus share for each share held, according to a disclosure to Tadawul. The capital hike will be financed by retained earnings and looks to strengthen the company’s capital base.

REMEMBER- Raoom recently rang the bell on the main market following its transition from Nomu, with shares closing 5.2% down at SAR 183 apiece on its debut.