Steel stocks including AK Steel and U.S. Steel rallied after President Donald Trump announced that the administration will implement a 25% tariff on steel imports and a 10% duty on aluminum.
U.S. manufacturing giants including Caterpillar fell on concern that the new levies will raise their costs and hurt their profits.
No specific timetables were given, but the president is expected to sign the order, which is currently being drafted, next week. Trump made the announcement during a meeting at the White House with executives from both the steel and aluminum industries, which he promised to help rebuild by shielding from unfair trade practices.
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The decision comes just weeks after the U.S. Commerce Department indicated that tariffs against foreign producers were necessary to safeguard the country’s national security interests. After conducting a review of the steel and aluminum industries, the department concluded that the volume and circumstance of imports “threaten to impair” national security. In response, the department recommended three potential options in order to increase U.S. steel manufacturing capacity: a 24% tariff on all steel imports from other countries, a tariff of at least 53% on 12 countries, including China, India and Brazil and, thirdly, a quota on steel imports from all countries equal to 63% of each country’s exports to the U.S., as measured by 2017 levels.