Tree Island Steel Ltd. Plummets on Monday
Tree Island Steel Ltd. (TSX:TSL) is a producer and supplier of steel wire and other products. The company is based in Richmond, B.C. Tree Island stock was down 5.7% in early afternoon trading on March 5. Shares have fallen 7.7% week over week as the United States appears poised to slap 25% tariffs on steel imports.
When the U.S. Department of Commerce originally unveiled the proposal to introduce steel and aluminum tariffs, some Canadian officials appeared confident that their country would be exempted. Interviews in recent days with Commerce secretary Wilbur Ross, Director of the National Trade Council Peter Navarro, and President Trump himself, have seemingly quashed that notion. All three have indicated that there will be no exemptions on tariffs and Canada will have to wrestle with the new reality.
In its full-year results released on February 22 Tree Island posted revenues of $234.7 million compared to $231.2 million in the prior year. The company also posted a net loss of $1.6 million is comparison to net earnings of $13.5 million in 2016. The stock also offers a dividend of $0.02 per share representing a 3.5% dividend yield.
It is difficult to predict the actions of the Trump White House going forward. There are reportedly bitter internal divisions in the cabinet over the tariffs, and many lawmakers have been lobbying aggressively for Trump to reconsider. In the short-term Canadian steel and aluminum stocks will likely pass through a period of volatility until investors get a clearer picture of how Canada will respond.