Stelco Holdings Inc. (TSX:STLC) was down 4.7% in early afternoon trading on March 1. The stock jumped following the release of its 2017 fourth quarter and full-year results on February 21. Revenue rose 45% year over year and adjusted EBITDA soared 245% to $69 million.
However, today President Trump announced that he would sign an order next week that would impose tariffs on steel and aluminum imports. The tariffs are expected to be approximately 25% on steel and 10% on aluminum. The Department of Commerce unveiled the proposals to Trump last month and included a provision that would exclude Canada and other allies from tariffs. Canada is the largest exporter of steel and iron to the U.S. Most see the tariffs as a move against China that could spark bitter trade battles.
Later in the morning White House officials appeared to walk back any concrete announcement next week. The Trump administration has seemingly softened on its harsh protectionist rhetoric and has pursued a conventional conservative platform of deregulation and tax cuts. Trade officials have even suggested that NAFTA negotiations have improved of late and that a deal may be forthcoming. Early in 2017 Trump had reportedly considered issuing an executive order to pull out of NAFTA.
Canadian steel makers should not panic just yet. Sweeping new tariffs would certainly be subject to challenge at the World Trade Organization (WTO). Ignoring that, reports indicate that Canada is likely to be excluded, but conflicting reports from this White House will be enough to make investors sweat in the short term.
