Would Trump Sacrifice Steel Tariffs for Broader Trade Deals?

Steel Companies’ 2019 Outlook: Can the Winning Streak Continue? (Continued from Prior Part) ## Steel tariffs Last year, President Trump imposed a 25% tariff on US steel imports that helped lift US steel prices to multiyear highs. The Trump administration has already granted Section 232 exemptions to some countries including Brazil and South Korea. The United States renegotiated its trade deal with South Korea last year. ## Negotiation tactic The Trump administration has indicated that Section 232 tariffs have helped bring other countries to the negotiating table. Section 232 exemptions could be extended to other countries also, as the Trump administration moves forward on new trade deals. While the Section 232 exemptions could be negative for US steel companies like U.S. Steel (X), AK Steel (AKS), and Nucor (NUE), we should remember that Trump has stood firm on his support to the US steel industry (SPY). ## Quotas While South Korea has been granted a long-term exemption from the Section 232 tariffs, the country agreed to a quota to get the exemption. In the case of Canada and Mexico, while the countries have agreed to the new USMCA, they are still covered under Section 232 tariffs. The Trump administration has been pushing for quotas below the current level of imports. As some countries like Canada haven’t agreed to quotas, they haven’t been granted Section 232 exemptions even after a new trade deal. This year, we could see the Trump administration move forward on some new trade deals. We could see quotas be imposed for Section 232 exemptions. US steel companies wouldn’t mind the exemptions much if the quotas are reasonably below the current import levels. China’s slowdown could be another key driver for US steel and iron ore companies this year. We’ll discuss this in detail in the next article. Continue to Next Part Browse this series on Market Realist: * Part 1 - Steel Companies’ 2019 Outlook: Can the Winning Streak Continue? * Part 2 - Are We Seeing a Typical Dead Cat Bounce from Steel Stocks? * Part 3 - What Should US Steel Investors Watch Out for in 2019?