Trump Tariff Update: Stocks Swing, GOP & Industry Speak Out

Continued uncertainty surrounding President Donald Trump’s proposed tariffs caused U.S. steel and aluminum stocks and funds—including U.S. Steel (NYSE:X) , Alcoa (NYSE:AA) , and the S&P Metals and Mining ETF (BE:XME) —to fluctuate on Tuesday.

The debate surrounding Trump’s proposed tariffs on steel and aluminum continues to rage, with some companies coming out against the overarching proposal and several prominent Republican lawmakers changing their rhetoric. Meanwhile, NAFTA negotiations also remain an inflection.

Aluminum Association

The U.S.-based Aluminum Association, which represents 114 companies including Alcoa, Vulcan (VMC), and others, voiced its concerns about the potential 10% tariff on aluminum in a letter to Trump on Monday.

The letter stated that the association agrees with the president’s overall idea to create a thriving domestic aluminum industry but does not side with Trump on the current all-encompassing proposal. In fact, the statement noted that the group’s members “fear that the proposed tariff may do more harm than good.”

The organization also offered to help Trump come up with a plan that exempts key trading partners, including Canada and the European Union, while coming down hard on China.

"Unfortunately, the tariffs proposed will do little to address the fundamental problem of massive aluminum overcapacity in China, while impacting supply chains with vital trading partners who play by the rules," the letter said.

GOP & NAFTA

House Speaker Paul Ryan today backed away from his previous call to drop the proposed tariffs outright in favor of a more measured and concentrated approach on countries that abuse the current system. Treasury Secretary Steven Mnuchin echoed some of Ryan’s sentiments when he spoke to lawmakers regarding current NAFTA negotiations.

“To the extent that we’re successful in renegotiating NAFTA, those tariffs won’t apply to Mexico and Canada,” Mnuchin said at a House hearing Tuesday.

Mnuchin’s sentiments seemed to back up Trump’s Monday comments regarding Nafta partners.

We have large trade deficits with Mexico and Canada. NAFTA, which is under renegotiation right now, has been a bad deal for U.S.A. Massive relocation of companies & jobs. Tariffs on Steel and Aluminum will only come off if new & fair NAFTA agreement is signed. Also, Canada must..

— Donald J. Trump (@realDonaldTrump) March 5, 2018

Stocks

With so much uncertainty surrounding these tariffs—which could have long-lasting impacts on economies around the world—and more industry experts coming out against the current proposal, investors might expect stocks to have dipped across the board. Instead, industry related stocks diverged Tuesday.

Aluminum powers Alcoa and Vulcan saw their stock prices surge over 3.5% and 2%, respectively, despite overall industry concerns regarding the basic 10% tariff.

Shares of steel giants United States Steel and Steel Dynamics (NASDAQ:STLD) dipped 0.7% and 1.1%, respectively. However, other steel firms, including Nucor (NYSE:NUE) and AK Steel (NYSE:AKS) experienced marginal gains.

Meanwhile, shares of industry ETFs like the VanEck Vectors Steel ETF (AX:SLX) climbed 0.8%, while the SPDR S&P Metals and Mining ETF popped nearly 2%.

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