Domestic steel manufacturing stocks billowed higher to start the week as President Trump doubled down on tariffs on imported metals. The new measures increased the tariff level on imported steel and aluminum to 50%, doubling the previous rate of 25%.
The market responded swiftly, led by Steel Dynamics Inc. (NASDAQ: STLD), which gained more than 10% and saw more than 3.3 million shares traded in Monday’s session. Nucor Corp. (NYSE: NUE) and Cleveland-Cliffs Inc. (NYSE: CLF) also rose dramatically on Monday, but STLD is the steel stock best positioned for more gains if tariffs continue to throttle imports.
Read on to learn why Steel Dynamics could be the biggest winner of Trump’s reignited trade war.
An Industry Where Tariffs Are a Tailwind
Firms like Steel Dynamics, Nucor, and US Steel Corp (NYSE: X) have been among the handful of companies that favor the new tariff regime. While the erratic rollout has roiled investors and business owners across various sectors, domestic steel manufacturers are salivating at the opportunity to expand their margins.
If importers are forced to raise prices to compensate for tariff costs, domestic manufacturers can also raise prices without a corresponding cost increase. The extra revenue is pure profit, and companies with growing margins are the apple of Wall Street analysts’ eyes.
Sheet steel spot prices have increased by more than 35% since the start of 2025 as domestic manufacturers embrace the tariffs. Steel Dynamics and Nucor haven’t exactly been shy about their plans to increase prices as cheap imports exit the market, either.
Nucor increased prices on its hot-rolled coiled steel nine times (NINE TIMES!) between January and April, from $710 per short ton to $935 per short ton. However, HRC steel prices have declined from $935/st to $900/st in the last few weeks as the industry adjusts to new market conditions.
This recent drop may have triggered the tariff bump as falling prices make the 25% import tax more manageable.
Why Steel Dynamics Grades Out Better Than the Competition
Steel Dynamics is prepared for an influx of new business as steel tariffs squeeze out imports. The company recently completed a new plant in Texas, which is already accelerating steel production. Aluminum sheets are also expected to start rolling out of a new mill in Mississippi this summer.
Expanding operations enables the company to enhance its impressive margins and earnings growth, which are already amongst the best in the industry. On a fundamental basis, STLD looks far more attractive than other publicly traded domestic steel producers.
|
Steel Dynamics |
US Steel |
Nucor |
Cleveland-Cliffs |
|
|
Net Margin |
8.76% |
2.46% |
6.60% |
-2.31% |
|
ROE |
17.32% |
4.27% |
9.85% |
-0.59% |
|
EPS |
$7.57 |
$0.29 |
$5.62 |
-$2.44 |
|
P/E Ratio |
17.83 |
184.22 |
19.46 |
-2.96 |
While Steel Dynamics doesn’t have the highest-yielding dividend in the sector, it may have the strongest, with a 26.42% dividend payout rate (DPR) and nearly 21% annualized growth over the last three years.
The company has also increased its annual dividend payout for 13 consecutive years.
The chart also shows a bullish technical situation. STLD shares had been range-bound before the latest announcement, but the 10% gain on Monday pushed the price above its previous 2025 high-water mark of $139.65.
While shares settled back under $136 by session close, the price is now above both the 50-day and 200-day moving averages, with the Relative Strength Index (RSI) still under the overbought threshold of 70.
Strong Earnings Prove Steel Dynamics Can Weather Macroeconomic Storms
[content-module:Forecast|NASDAQ: STLD]A deteriorating economic outlook in the second half of the year could pose a significant challenge to the steel industry, especially from the construction sector. High mortgage rates have kept the housing market nearly frozen in many regions across the nation, and housing and infrastructure construction are tremendous drivers of steel sales.
More than 50% of global steel production was allocated to construction in 2023, compared to 12% in the automotive industry. Slumping home and vehicle sales could dampen the optimism currently boosting the steel sector, but Steel Dynamics' strong margins and clean balance sheet (a debt-to-equity ratio of 0.35) have analysts mostly in agreement.
Steel Dynamics reported a top- and bottom-line beat during its April 22 earnings release, with the 1.44 EPS figure beating expectations by 0.04 and $4.37 billion in revenue surpassing the estimated $4.17 billion. Analysts have been quick to upgrade STLD shares in 2025, including two upgrades from Neutral to Buy in March from BMO Capital Markets and UBS Group, respectively.
Overall, eight of the 11 analysts covering the stock have Buy ratings with an average price target of $147.44, hinting that upside of at least 8% remains from current levels.
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