Callum Keown and Al Root

President Donald Trump's trade war is escalating fast.

Steel stocks surged early Monday after Trump promised to impose 25% tariffs on imports of steel and aluminum. The levies will apply to all countries exporting the metals to the U.S., he added, in comments made to reporters en route to Sunday's Super Bowl.

The tariffs would make it harder for overseas companies to sell lower-priced steel on the U.S. market, supporting domestic producers. U.S. steel makers could also hike their own prices as a result.

Shares of Cleveland-Cliffs jumped 9.6% ahead of the open to $11 apiece, while Nucor stock was up 8.3% at $141.03. Steel Dynamics stock was up 5.8% at $133.99, and shares of aluminum producer Alcoa were up 4.7% at $37.80.

S&P 500 and Dow Jones Industrial Average futures were up 0.4% and 0.3%, respectively.

Shares of United States Steel rose 5.7% to $39.10. That rise nearly wipes out Friday's 5.8% loss that came after President Trump said that Nippon Steel would invest in U.S. Steel instead of buying it.

Nippon has been trying to acquire U.S. Steel for $55 a share. The deal faced stiff political opposition, with President Biden blocking it in January. Nippon declined to comment on the president's remarks.

Shares of German steel producers Thyssenkrupp and Salzgitter opened sharply lower before paring losses in early European trading. Thyssen stock was down about 0.1% in overseas trading. Salzgitter shares were off about 0.6%.

Benchmark steel prices have risen about $60 per ton to roughly $750 since late January. That's still below the $1,000-$1,500 range per ton from 2021 to 2022, when steel-company profits were much higher. Many factors influence steel prices, such as a weak manufacturing economy, and imports.

Tariffs as a means of helping the domestic steel business have been tried several times in the recent past. President George W. Bush put in place tariffs between 2002 and 2003. President Donald Trump initiated tariffs in 2018. Several countries, including Canada and Mexico, were able to get exemptions from the levies. President Joe Biden imposed tariffs on a range of Chinese products, including steel in 2024.

The lasting impact of tariffs on the industry is challenging to determine. Steel stock has performed well over the past five years, but that starting point is close to Covid-19-related lows.

Baird machinery analyst Mig Dobre wrote Sunday that steel accounts for about 20% of the cost of heavy machinery. Companies tend to add surcharges for higher metal prices, passing them on to customers. "The 2018 tariff resulted in price increases in the 4%-to-6% range as a result."

President Donald Trump said he would announce the new tariffs on Monday, along with what he described as "reciprocal tariffs" on Tuesday or Wednesday on countries that have imposed levies on U.S.-made goods.

"Very simply, it's if they charge us, we charge them," he told reporters on Air Force One on his way to New Orleans to watch the Philadelphia Eagles beat the Kansas City Chiefs.

China's retaliatory tariffs against the U.S. came into effect early Monday, ramping up trade tensions between the world's two largest economies. Beijing announced the levies last week, including a 15% tax on U.S. imports of coal and liquefied natural gas, in response to Trump's additional 10% tariffs on Chinese goods.

Even the postponed 25% tariffs on Mexico and Canada could come back into focus. Trump agreed to delay the taxes by 30 days last week, but told Fox News Sunday that what the U.S.' neighbors had done to avoid the tariffs was "not good enough."

Write to Callum Keown at callum.keown@dowjones.com and Al Root at allen.root@dowjones.com

This content was created by Barron's, which is operated by Dow Jones & Co. Barron's is published independently from Dow Jones Newswires and The Wall Street Journal.

(END) Dow Jones Newswires

February 10, 2025 07:29 ET (12:29 GMT)

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