Trump Hints At Steel And Aluminum Duties After Touting Jobs Numbers $AA $CENX $X

On Sunday, President Trump shifted gears to the economy in a series of tweets, and specifically mentioned the steel and aluminum industries.

Stock Market at all time high, unemployment at lowest level in years (wages will start going up) and our base has never been stronger!

— Donald J. Trump (@realDonaldTrump) July 2, 2017

Really great numbers on jobs & the economy! Things are starting to kick in now, and we have just begun! Don't like steel & aluminum dumping!

— Donald J. Trump (@realDonaldTrump) July 3, 2017

Dow hit a new intraday all-time high! I wonder whether or not the Fake News Media will so report?

— Donald J. Trump (@realDonaldTrump) July 3, 2017

Anti-Dumping

During the 2016 presidential campaign, Trump spoke extensively about ‘fair trade’ with America, and in April, the administration launched two investigations into steel and aluminum dumping. Dumping is a type of predatory trade in which foreign manufacturers flood a region with exports at prices which significantly undercut those offered by domestic producers.

In March, the Trump administration began investigating China for dumping aluminum foil as a review of existing anti-dumping duties, and in in mid April, Trump launched an investigation into steel dumping while surrounded by steel company executives and the President of United Steel Workers International.

“Steel is critical to both our economy and our military,” said Trump. “This is not an area where we can afford to become dependent on foreign countries.”

And while the President was hesitant to directly blame China (two weeks after meeting with Chinese President Xi), U.S. Commerce Secretary Wilbur Ross did not mince words – telling reporters “Steel imports have continued to rise, despite repeated Chinese claims that they were going to reduce their steel capacity, when instead they have actually been increasing it constantly. In the first couple months of this year alone, steel imports rose 19.6 percent. It’s a very serious impact on the domestic industry.”

One week later, Trump ordered his administration to also look into wider scale aluminum dumping.

Looks like they’re serious…

Fast forward to June 20, Secretary Ross told a room full of Germans at an economic convention attended by Chancellor Merkel that the United States may have to resort to ‘broad-scale’ measures to fight steel dumping if foreign producers can’t agree on a solution.

“If President Trump takes action on dumping it will be in the hope of provoking a collective solution by importing nations”

“Lacking strong action in conjunction with our partners we may have no alternative but to engage in self help… If we do so it might have to be on a broad scale.” –U.S. Commerce Sec. Wilbur Ross

Without specifying the specific actions which would be taken, Ross said that even countries which were not direct sources of dumping might be affected by whatever solution was employed.

“If President Trump takes action on dumping it will be in the hope of provoking a collective solution by importing nations,” Ross told members of Merkel’s conservative Christian Democratic Union. “Lacking strong action in conjunction with our partners we may have no alternative but to engage in self help,” he said. “If we do so it might have to be on a broad scale.”

India’s Anti-Dumping Duties

In a similar effort to curb Chinese and EU dumping, India’s finance ministry is cracking down on the practice as well, with their own anti-dumping investigation slated to wrap up at the end of September.

“The entire steel industry would have been killed otherwise…in the last three-four years, not just India but the whole world has been shaken by China dumping the surplus across the globe,” said India’s Supreme Court Justice A.K. Skiri.

Who’s going to benefit?

If Trump announces anything resembling a serious import duty on foreign steel and aluminum producers, expect Alcoa (AA), Century Aluminum (CENX), and U.S. Steel (X) to directly benefit – along with several others.

Here are a few steel & iron manufacturers listed by hybrid score in the Exodus algorithm. Note that MT (Arcelor Mittal) is currently flagging overbought, and has an average 10 day gain of 4.42%, 6 out of the last 6 times the system has flagged. Indeed, many times when a stock is considered overbought, it will knife higher – which is why it’s useful to use an algorithm that keeps track.

You can check out the rest of ’em and their various overbought / oversold stats inside Exodus.

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