Stelco Holdings Inc. (TSX:STLC) was down 2.94% in late morning trading on May 31 after the Trump administration announced it would move forward with its proposed tariffs. Those include a 25% tariff on steel imports and a 10% tariff on aluminum imports. The administration had allowed for temporary exemptions amidst improving NAFTA talks but the breakdown in May seems to have motivated the White House to take the hardline path forward with key allies.
The European Union and Mexico will also be hit with the proposed tariffs. On Thursday the EU said it would retaliate with duties of its own and target a number of American industries like motorcycles, bourbon whiskey, and jeans. Canada has also vowed to retaliate, but has not specified how.
Commerce secretary Wilbur Ross cryptically said that he was looking forward to “continued negotiations” with Canada and Mexico over NAFTA. Reportedly the GOP wants to close the book on NAFTA before the November midterm elections, and the tariffs may be the added incentive the administration has turned to in order to push talks forward. Trump has said that he would move to exempt both countries in the event of a deal.
Tree Island Steel Ltd. (TSX:TSL) was surprisingly up 0.89% in the same period of trading. Investors should watch closely and consider an entry point as these tariffs are likely to be temporary. Several chapters of NAFTA have already been resolved, but auto content continues to be a sticking point. Look for negotiations to ramp up in the summer.
