United States Steel stock soared as Donald Trump won a second term in the White House.
Gains don’t mean a takeover attempt by Nippon Steel is likely to succeed. Instead, investors are focused on tariffs and taxes.
Shares of the steel maker were up 5.8% in premarket trading at $41.34 apiece while S&P 500 and Dow Jones Industrial Average futures were up 2.1% and 2.8%, respectively.
The stock rallied as the Associated Press called key swing states of North Carolina, Georgia, and Pennsylvania in Trump’s favor, putting him just three electoral votes away from a return to the White House. The AP called Wisconsin for Trump shortly before 6 a.m. Eastern time, giving Trump the electoral college votes required for victory.
Despite early gains, U.S. Steel shares are still well below a $55 all-cash offer from Nippon. The potential Japanese takeover has faced stiff political opposition, including from Trump, who has called a Japanese takeover of an iconic U.S. manufacturing company “psychologically” difficult for the industry.
That might be true, but the deal brings benefits. Nippon has committed billions to improving U.S. Steel’s domestic operations—billions that U.S. Steel doesn’t have. Nippon is the fourth largest steel maker on the planet. U.S. Steel is the 24th largest.
Wednesday’s gains are likely related to tariffs and taxes. Trump wants to cut corporate tax rates to about 15% from 21%, benefiting all domestic producers. He also favors import tariffs that mean more protection and higher prices for domestic producers.
Tariffs can help. The problem for steel investors is tariffs haven’t been enough to boost stock prices over the long-term. They tend to be temporary and don’t fix structural issues such as industry fragmentation and oversupply.
U.S. Steel stock has fluctuated between roughly $10 and $40 for years, moving mainly on the state of industry fundamentals including steel demand and steel prices.
Investors won’t ignore the short-term impact though. Other steel stocks are moving early Wednesday too. Nucor and Steel Dynamics shares were up about 10% and 9%, respectively. Cleveland-Cliffs shares were up about 11.1% at $12.90 apiece.
