How will the Trump administration influence the American steel industry

Can the Trump administration really support the steel industry? Will the aggressive way to renegotiate trade agreements be an advantage for steel companies and their investors?

On the one hand, if the Trump administration can speed up the fight against improper government subsidies for foreign steel imported into the country, it would be a good thing. On the other hand, a violent attitude in trade could affect the US economy. This could be devastating.

The Trump administration support the steel industry on trade and the current environment for steel producers

Donald Trump’s election promise was „making America great again”, built on creating jobs in the US manufacturing sector. It cannot be denied that American steel producers have suffered in recent years, under the wave of illegal imports.

The extent of the problem: The industry „struggled” during a period of very high consumption. And not to a lesser extent because of a large amount of illegal imports.

Countervailing anti-dumping duties have been implemented against some of the biggest violators, and steel imports have fallen since the start of the year, while prices have rebounded. At the same time, there are still many „things to do”. There are several pending trade lawsuits related to a number of steel products that are not protected against dumping practices. In addition, some foreign producers try to avoid duties by passing their products through third countries. If Trump is serious about taking steps to support the American manufacturing sector. This is an area that his government will focus on.

Trade policy is only one part that affects the receipts of steel producers. Steel production is an expensive endeavor with high fixed costs and is also cyclical in nature. In other words, steel producers can be very prone to a quick turnaround. From huge profits to big losses when demand changes.

For this reason, successful investment in steel production is often a product of a defensive mindset. And protection against the risks of negative evolution. This is especially true under a Trump administration, with plans to fight aggressively for American production.

Article source: http://www.fool.com/investing/2016/11/14/how-will-a-trump-presidency-affect-steel-stocks.aspx