The Department of Commerce Tuesday imposed preliminary duties on imports of cold-rolled steel, used to make auto parts, appliances and shipping containers, from seven countries including China, whose steelmakers were slapped with a massive tariff. The U.S. government announced preliminary anti-dumping duties of 266% for China, 71% for Japan, 39% for Brazil, between 6% and 31% for the U.K., between 13% and 17% for Russia, 7% for India and between 2% and 7% for South Korea, JPMorgan (JPM) wrote in a note today.
United States Steel (X - Get Report) stock is skyrocketing 20.46% to $11.07 on heavy trading volume this afternoon. After enduring one of their worst downturns ever, American steelmakers are now counting on tariff protection to help ride out a weak market. A slowdown in the steel-heavy oil-and-gas industries combined with a boom in Chinese exports has deflated steel prices around the world.
The benchmark hot-rolled coil index fell 35% in 2015 to under $400 per ton, contributing to a $1.5 billion loss at U.S. Steel Corp., and an almost $8 billion loss at ArcelorMittal, the world’s biggest steelmaker, which has big operations in the U.S. U.S. Steel's weaknesses include its deteriorating net income, generally high debt management risk, disappointing return on equity, weak operating cash flow and generally disappointing historical performance in the stock itself.
Besides the fates of the individual companies, the tariff debate is landing in a campaign season where trade looms as a potentially major issue. The campaign season and the rise of Donald Trump are renewing focus on the U.S. trade deficit with China, which averaged $1 billion a day in 2015. Mr. Trump has said he would impose large tariffs on Beijing, alarming U.S. officials and industry leaders who back free trade.