With President Donald Trump announcing a 25% tariff on all imported steel and aluminum, investors are piling into domestic metal producers. The U.S. currently relies on imports for over 80% of its aluminum needs, meaning these new tariffs could drive demand toward domestic suppliers. The immediate market reaction was strong, with key players in steel and aluminum seeing major gains. While short-term stockpiles may cushion price impacts, analysts expect domestic production to ramp up, creating opportunities for investors looking to capitalize on the shift. Here are three stocks positioned to benefit from the new trade policy.
Cleveland-Cliffs (NYSE: CLF) – A Tariff-Backed Powerhouse with M&A Ambitions
Cleveland-Cliffs was one of the biggest winners on the news, jumping over 14% after the announcement. As a fully integrated steel producer with iron ore mines in Michigan and Minnesota, Cleveland-Cliffs stands to benefit directly from reduced competition and higher domestic steel prices. CEO Lourenco Goncalves has been an outspoken advocate for tariffs, calling them a potential game-changer for revitalizing American manufacturing.
Beyond benefiting from the tariff protection, Cleveland-Cliffs is also making aggressive moves in the industry. The company has been actively pursuing a deal to acquire U.S. Steel, which was recently blocked from being purchased by Japan’s Nippon Steel. Reports suggest that Cleveland-Cliffs may even partner with Nucor to make a joint bid. If successful, this acquisition could further consolidate the domestic steel market, giving Cleveland-Cliffs even more pricing power in a tariff-protected environment.
Nucor (NYSE: NUE) – A Steady Giant Positioned for Growth
Nucor surged more than 7% following the tariff news, and for good reason. The company is the largest steel producer in the U.S. and operates a network of highly efficient mini-mills that allow it to adapt quickly to market changes. Unlike traditional steelmakers burdened by legacy blast furnaces, Nucor’s model enables it to adjust production as demand fluctuates. With a more favorable pricing environment ahead, Nucor’s ability to scale efficiently should translate into higher margins and stronger earnings.
Another key advantage for Nucor is its strong balance sheet, which allows it to make strategic acquisitions and invest in expanding capacity. If the tariffs remain in place for an extended period, Nucor is likely to increase capital spending to meet growing demand for domestically produced steel. Additionally, there’s speculation that Nucor could play a role in the potential Cleveland-Cliffs bid for U.S. Steel, giving it further influence in shaping the future of the U.S. steel market.
Alcoa (NYSE: AA) – A Beneficiary of Rising Aluminum Prices
While much of the focus has been on steel, Alcoa is another major player set to gain from the tariffs. Shares of the aluminum producer jumped more than 4% following the announcement, reflecting expectations that higher import costs will drive more business to U.S.-based suppliers.
JPMorgan analysts estimate that the 25% aluminum tariff could add nearly 30 cents per pound to prices, not including additional transportation and logistics costs. Given that Canada supplies about 70% of U.S. raw aluminum imports, the new tariffs could significantly shift sourcing dynamics in favor of domestic producers like Alcoa. If demand for American-made aluminum increases, Alcoa could see a meaningful boost to both revenue and profitability in the coming quarters.
The Bottom Line
The announcement of 25% tariffs on imported steel and aluminum is already shaking up the market, and domestic producers like Cleveland-Cliffs, Nucor, and Alcoa are well positioned to benefit. While tariffs can be unpredictable and subject to policy changes, the near-term outlook suggests strong momentum for these companies. For investors looking to capitalize on the shift in trade policy, these three stocks offer compelling opportunities in the months ahead.
