Worth Considering
If you think now is a good time to buy steel stocks…
Two studies from the National Bureau of Economic Research found that the overall economic impact of Trump’s 2018 tariffs was a net negative for American consumers – both companies and individuals.
One example: the tariff protection enacted by Trump’s “pro-steel” policymakers. It has made it easier for US steel companies to compete against foreign steel companies, and has thus “saved”’ thousands of jobs for US steel company employees. As a result, however, the overall cost of steel-related products has increased sharply. Since steel‐consuming individuals are a far larger share of the US economy and workforce than is the steel industry, the net effect on the vast majority of US citizens and the US GDP has been decisively negative.
Smart investors understand this. They understand that American steel consumers are paying much higher prices than their global competitors, and that, ultimately, it will end badly. That is why US steel‐industry stocks are lagging far behind the S&P 500 and will continue to do so until the trade war ends.