Shares in U.S. aluminum and steel companies from Alcoa Corp. to Nucor Corp. surged after the U.S. Commerce Department recommended that President Donald Trump impose a range of restrictions on imports from tariffs to quotas.
In a briefing with reporters on Friday over the results of his department’s investigation, Commerce Secretary Wilbur Ross proposed a 24 percent global tariff on steel shipments coming into the U.S. and a 7.7 percent duty on aluminum imports. Trump has the latitude to choose between these types of options or even enter talks with producers to find solutions.
The recommendations pushed up Century Aluminum Co. as much as 11 percent, while Alcoa gained 5.5 percent. Aluminum on the London Metal Exchange rose as much as 2.4 percent as of 5:15 p.m. in London. Among steelmakers, Nucor, the largest American producer, climbed almost 6 percent, the biggest intraday increase since November 2016. U.S. Steel Corp. advanced 13 percent, the most since November.
Trump instructed the Commerce Department last year to probe whether imports of steel and aluminum represent a threat to U.S. national security. The investigation took place under the seldom-used Section 232 of the Trade Expansion Act of 1962. Commerce Secretary Wilbur Ross last month submitted his department’s final reports to Trump on steel and aluminum. The president now has until about mid-April to decide on any potential action.
Imposing tariffs on such widely used commodities may trigger retaliatory measures from China, the world’s biggest producer of steel and aluminum. It could also inflate manufacturing and consumer prices in the U.S., and inflame tensions with allies such as Japan, India, Germany and Canada. Group of 20 economies have pushed back against the threat of steel tariffs, warning such a move could set off a trade war.
At least a 53 percent tariff on steel imports from Brazil, China, Costa Rica, Egypt, India, Malaysia, Korea, Russia, South Africa, Thailand, Turkey, Vietnam, with a quota by product on steel imports from all other countries equal to 100 percent of their 2017 exports to the U.S. Quota on steel imports from all countries up to 63 percent of their 2017 exports to the U.S. For aluminum, a 23.6 percent tariff on metal when it comes from China, Russia, Venezuela and Vietnam and Hong Kong An aluminum quota of 86.7 percent of 2017 exports
Trump is facing resistance to tariffs from lawmakers in his own party. At a meeting this week at the White House, at least seven Republican lawmakers argued against any action that might set off a tit-for-tat response from China or other countries.
Trump said the U.S. steel and aluminum industries “are being decimated by dumping and from many countries.” The administration is now considering “all options, and part of the options would be tariffs,” he told lawmakers at the meeting. Such measures would encourage steel and aluminum producers to come back to the U.S., he said. Some companies in the steel industry, as well as unions such as United Steelworkers, have been pushing the president to come down hard on imports.
Speculation about possible U.S. action has roiled the metals industry. Imports of steel increasing last year on anticipation that new tariffs would elevate costs.
Copyright 2018, Bloomberg News