Skip to Content
Stock Strategist Industry Reports

U.S. Steel and Aluminum Makers Would Gain From Commerce Proposals

Even after raising our fair value estimates, though, we still think our coverage is overpriced.

Mentioned: , , , , , , , ,

On Feb. 16, the Department of Commerce released two lengthy reports providing recommendations resulting from its investigations related to Section 232 of the Trade Expansion Act of 1962. These suggest heavy tariffs or quotas on steel and aluminum imports to the United States. The recommended remedies were calculated to achieve an 80% capacity utilization rate for each industry. President Donald Trump now has 90 days to review the proposals and determine the appropriate course of action. Effectively, Trump has been provided a menu of options to address each industry, which includes a global quota, a global tariff, or individual tariffs on a subset of countries. All potential tariffs and quotas would be in addition to the plethora of antidumping and countervailing duties that are already in place.

If the Department of Commerce’s recommendations are enacted, they will be met with significant opposition. Within the U.S., companies that consume high volumes of steel and aluminum will continue to object, as their steel and aluminum input costs are likely to rise. Outside the U.S., countries that export large volumes of steel and aluminum to the U.S. will object that this unilateral action breaches international trade obligations as established under the World Trade Organization. A series of appeals to the WTO would probably follow. Many argue that this aggressive action might spur an all-out trade war, as targeted countries might retaliate with trade sanctions of their own on U.S. export products. Given that the recommendations have been made under the guise of protecting U.S. national security (the nature of a Section 232 investigation), widely believed to be a loophole that facilitates protectionism, U.S. trade partners are likely to cry foul. Regardless, we think it’s highly likely that Trump will follow through on some form of these recommendations.

Andrew Lane does not own (actual or beneficial) shares in any of the securities mentioned above. Find out about Morningstar’s editorial policies.

Transparency is how we protect the integrity of our work and keep empowering investors to achieve their goals and dreams. And we have unwavering standards for how we keep that integrity intact, from our research and data to our policies on content and your personal data.

We’d like to share more about how we work and what drives our day-to-day business.

We sell different types of products and services to both investment professionals and individual investors. These products and services are usually sold through license agreements or subscriptions. Our investment management business generates asset-based fees, which are calculated as a percentage of assets under management. We also sell both admissions and sponsorship packages for our investment conferences and advertising on our websites and newsletters.

How we use your information depends on the product and service that you use and your relationship with us. We may use it to:

  • Verify your identity, personalize the content you receive, or create and administer your account.
  • Provide specific products and services to you, such as portfolio management or data aggregation.
  • Develop and improve features of our offerings.
  • Gear advertisements and other marketing efforts towards your interests.

To learn more about how we handle and protect your data, visit our privacy center.

Maintaining independence and editorial freedom is essential to our mission of empowering investor success. We provide a platform for our authors to report on investments fairly, accurately, and from the investor’s point of view. We also respect individual opinions––they represent the unvarnished thinking of our people and exacting analysis of our research processes. Our authors can publish views that we may or may not agree with, but they show their work, distinguish facts from opinions, and make sure their analysis is clear and in no way misleading or deceptive.

To further protect the integrity of our editorial content, we keep a strict separation between our sales teams and authors to remove any pressure or influence on our analyses and research.

Read our editorial policy to learn more about our process.