With the Trump administration taking office in 2025, proposed tariffs on imports across the board have raised inflation concerns. Many stocks are feeling the impact of stockpiling ahead of the new tariffs, while others are falling on the prospect of higher costs, dampening demand and compressing margins. The basic materials sector is preparing for a possible rise in steel prices. This means imposing a 60% tariff on US imports of Chinese-origin steel.
This may have little impact given that China has a negligible market share in US steel imports. However, the aim is to attract more business to the country’s steel producers. While this sounds like a boon for domestic steelmakers, Trump’s “Made in America” stance could also hurt certain steel stocks. Here’s one steel stock to buy and one to sell according to Trump’s tariffs.
US Steel: Nippon’s takeover bid will likely be crushed
US Steel Today
United States steel
As of 06/01/2025 at 03:58 PM ET
- 52 week range
- $26.92
▼
$48.85
- Dividend yield
- 0.61%
- P/E ratio
- 21.74
- Price target
- $41.32
Nippon Steel won the bidding war American Steel Company New York Stock Exchange: X For $55.00 in cash, a total of $14.9 billion and a 40% premium to the closing price on December 15, 2023. It beat local producer Cleveland Cliffs Inc. New York Stock Exchange: CLF. Nippon Steel has pledged to protect the jobs of current US Steel employees and invest an additional $2.7 billion in its facilities. By April 2024, shareholders had unanimously approved the deal.
However, the Committee on Foreign Investment in the United States (CFIUS) remained deadlocked on the deal until its December 23, 2025 deadline. This triggered a 15-day deadline for President Biden to issue a decision. On January 3, 2025, Biden halted the deal, citing national security concerns. Both Nippon and US Steel opposed the ban and stated that they would continue to pursue the deal. The companies reported that the policy tainted the review process and was identified in advance.
President Trump and the Steelworkers union oppose the deal
If companies were expecting any sympathy or attention from incoming President Trump, they were out of luck. Trump said early on that he opposed the deal. The United Steelworkers Union also opposed it. Steelworks chief David McCall described Nippon Steel as a serial trade fraud, commenting: “Allowing it to buy US Steel would have provided it with the opportunity to further destabilize our trading system from within and, in the process, jeopardize our ability to meet our national needs.” security needs and critical infrastructure.” With fundamentals experiencing problems during a market downturn, investors may want to sell these properties.
United States Steel Co. price chart. (X) for Tuesday, January 7, 2025
Repercussions of the prohibited transaction
Not only does US Steel want the deal, it needs to close the deal for the sake of its future. US Steel has aging infrastructure based on expensive and inefficient blast furnace technology, which also faces environmental scrutiny. It could have used capital infusion from Nippon to modernize its facilities. It has already warned that failure to cash in that would come from the deal, would shift production away from outdated blast furnaces to economical, non-union electric arc furnaces and move its headquarters out of Pittsburgh. US Steel has lost market share and faces rising costs due to its large unionized workforce.
Steel Dynamics: A local winner with a solid balance sheet
Steel dynamics today
Effective 06/01/2025 at 04:00 PM ET
- 52 week range
- $104.60
▼
$155.56
- Dividend yield
- 1.55%
- P/E ratio
- 10.74
- Price target
- $141.13
While 2024 has been a tough year for the Fort Wayne, Indiana-based company Steel Dynamics Company Nasdaq: StldThe company has a strong balance sheet with low debt to weather the overall climate. President Trump’s protectionist policies should help boost the company’s business. However, the forecast was lowered in December with the global market still likely to be weak in 2025. Finnish steelmaker Otokounmpo had warned that the oversupplied European market was worsening, as weak demand coupled with extended site maintenance would negatively impact Its profits.
Set the bar low for now, but there is light at the end of the tunnel
On December 16, 2024, Steel Dynamics also raised its guidance for the fourth quarter of 2024. The company expects fourth-quarter EPS to range from $1.26 to $1.30 versus consensus estimates of $1.63. Earnings are expected to be significantly lower than the third quarter due to lower average realized prices, seasonally lower shipments, and an unplanned outage at the Butler Flat Roll division, which resulted in a 50,000 ton decrease in shipments. However, customers were positive regarding the business outlook for 2025.
Steel Dynamics, Inc. Price Chart (STLD) for Tuesday, January 7, 2025
Order backlog extends into the first half of 2025 as interest rates decline and support for the US infrastructure program and inland transportation is expected to have a positive impact on demand for steel joists, deck products, flat rolled steel and long steel products. . The company expects volumes to improve in the second half of 2025 and has repurchased shares worth $250 million. Bullish investors may view this stock as a value play.
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