Why Cleveland-Cliffs Stock Just Dropped
Cleveland-Cliffs (NYSE: CLF) stock fell 8.5% through 2:10 p.m. ET Tuesday after Reuters reported on new trade negotiations between the U.S. and Mexico that could significantly roll back 50% tariffs on steel imports -- which had themselves been announced only last week.
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50% -- up to a point
The negotiations would not affect all steel imports -- only those from Mexico, and only to an extent. While details haven't yet been made public, Reuters reports the idea will be to permit a certain quota or specified volume of steel to come into the U.S. from Mexico duty free, or at a reduced tariffs rate. Imports in excess of that quota or volume limit would still pay the 50% tariff.
And of course, the 50% tariff will remain in place for imported steel from other countries.
Is Cleveland-Cliffs stock a sell?
Just the rumor of the creation of this single Mexican loophole, though, seems to have shaken investors' confidence that Cleveland-Cliffs stock is a sure thing -- and no wonder. After all, if tariffs can be renegotiated lower with one country, they can be renegotiated lower with other countries as well -- or even lowered back down to previous levels with entire regions (such as the E.U. or North America), or with the world as a whole.
That would be bad news for Cleveland-Cliffs investors, who've been counting on tariff policy to help turn their company profitable again, after losing $754 million a year. At the same time, the company has to worry about domestic competition from a U.S. Steel that will soon be backed by money from Japan's Nippon Steel.
It's a good reminder for investors: If you're counting on a change in government policy to save your stock, you may be setting yourself up for a fall.
Should you invest $1,000 in Cleveland-Cliffs right now?
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Market Segmentation Deployment Model Insights Cloud-Based On-Premises Component Insights Hardware Software Services Type Insights Electronic Health Records (EHR) Health Information Exchange (HIE) Interoperability Solutions Integration Platforms Interoperability Level Insights Foundational Interoperability Structural Interoperability Semantic Interoperability End User Insights Healthcare Providers Healthcare Payers Pharmaceutical Companies Research Institutions Regional Insights North America U.S. Canada Latin America Brazil Argentina Mexico Rest of Latin America Europe Germany U.K. Spain France Italy Russia Rest of Europe Asia Pacific China India Japan Australia South Korea ASEAN Rest of Asia Pacific Middle East GCC Countries Israel Rest of Middle East Africa South Africa North Africa § Central Africa Get Customization on this Report: About Us: Coherent Market Insights leads into data and analytics, audience measurement, consumer behaviors, and market trend analysis. 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