President Trump announced Friday that steel and aluminum tariffs will increase from 25% to 50%, calling the move a cornerstone of his "America First" agenda to restore U.S. manufacturing. The tariffs will take effect on Wednesday, sparking huge rally in U.S. metal stocks as investors bet on stronger domestic production and profits.

Trump visited a steel factory near Pittsburgh at the end of last week to promote a treatment partnership with Japan’s Japanese Steel, describing the deal as a “planned investment” despite foreign involvement that would enable the iconic steel factory to operate in the U.S.

He also revealed the improvements in steel during this event:

"I believe this group of people who just made this investment are very happy because it means no one can steal your industry. It's 25% they can overcome the fence, and on 50% of the fence, they can never get over the fence again."

By the early hours of Monday, shares of Steel and Aluminum were added to the tariff news:

• Cleveland - Cliffs: +32.8%

• nucor: +14%

• Steel dynamics: +5.9%

• Century Aluminum: +13%

• US Steel: Flat

• Alcoa, Kaiser aluminum: Flat

• Arcelormittal: Stocks fell

• C: The stock jumped

Chart: Cleveland-Cliffs

BMO Capital Markets analyst Katja Jancic told clients that the steel and aluminum tariffs led her to upgrade from market performance to outperforming the market while downgrading Algoma to market performance – “because the company is a relative tariff loser.”

"Nucor is executing a multi-year organic growth plan that should support higher circular profitability and FCF over time," said Jancic. She set Nucor's price target at $145, which means a 33% increase compared to the last closure.

Goldman Sachs analyst Eoin Dinsmore, Aurelia Waltham, etc. provide clients with the idea that steel and aluminum tariffs increase copper prices:

• President Trump announced that the 232 tariffs for steel and aluminum will double to 50% on June 4.

• In March, the S232 aluminum tariff increased from 10% to 25%, and all exemptions to steel and aluminum tariffs were removed. Since then, prices paid by U.S. steel and aluminum consumers have risen, and now, U.S. steel prices account for 100% of the premium of the Midwest aluminum in the U.S. - prices paid at the LME price delivered in physically - 25% of the current 25% of the price accounts for 85% (2).

• In terms of investment, since the tariffs increased, UAE Global Aluminum has announced a $4 billion investment in investment in U.S. aluminum smelters and plans to conduct its first production in 2030. Major steel investments have not been announced yet, but the previously announced large investments from Nippon Steel in Japan and Nippon Steel in Korea and Hyundai in South Korea have begun the development of DELAERS.

• The market expects that overseas companies investing in will receive some form of tariff relief on current freight to the U.S., which poses risks to full tariff pricing.

• If higher metal tariffs come into effect and remain in place, the US Midwest aluminum premium will need to rise from 38c/lb to around 68-70c/lb to keep import flowing. Now, US spot steel (hot coil) price is $888/st (3), up 29% YTD (but down 10% from its March high). Although U.S. steel futures may gather if the new 50% tariff goes into effect, we insist that the entire tariff (currently 25% or announced 50%) does not need to consider spot prices (currently) due to still high steel stocks, bland stocks, numerous inventory demands and relatively low import demands. Higher prices may also have a further impact on U.S. steel demand in manufacturing, which we already expect to sign this year.

• We believe that higher metal tariffs raise the probability of copper import tariffs following the S232 survey - we already think this is underestimated. However, any future U.S. copper investment may come with some form of exemption, which could undermine the full value pricing. US copper prices on December 25 were on a 12% ($1,135/t) premium to global benchmark trades on Friday, indicating a $1,235/3,605/t rise if 25/50% tariffs were delivered. Therefore, we reiterate the long-term DEC-25 COSEX-LME copper arbitrage trade proposal.