Jim Cramer says steel tariffs are a 'double-edged sword' for industry

CNBC

2 days ago

CNBC's Jim Cramer on Monday said President Donald Trump's new steel tariffs are a "doubled-edged sword" for domestic producers as he explained why he's not jumping to buy stocks like Nucor.
"I'd be much more bullish on Nucor going forward if we just got some clear signals that the overall economy was doing better and that there would be more demand for building things — like cars, homes — and generally more macroeconomic strength," he said. "All of that's more important to Nucor's stock than incrementally higher steel prices courtesy of these tariffs."
Trump last week announced he would double tariffs on steel products, raising the duties from 25% to 50%. The news sent stocks in the sector climbing, with Nucor and Steel Dynamics gaining more than 10% and Cleveland-Cliffs popping just over 23%.
But these new tariffs alone aren't reason enough to buy steel names like Nucor, Cramer asserted, even as he said he supports the new policy to prevent foreign steel dumping. Cramer said it's not worth paying up for these stocks, and he'd wait for an opportunity to buy on weakness — in part because he's not sure if the new policy will help business immediately.
While tariffs on imported steel are usually good for these companies, they're not the only thing that matters for earnings, Cramer continued. For example, he pointed out that Nucor hasn't always been able to hold on to gains following positive tariff developments, as "smokestack stocks are always hostage to the Federal Reserve." Nucor gave up much of its post-election wins at the end of the last year because the central bank paused its rate cutting cycle, Cramer explained.
Tariffs are also a mixed development for Nucor, Cramer said. The new duties are positive in that they raise average selling prices, he said. But they're negative in that they're not necessarily good for aggregate demand, he continued, noting that construction projects could be thwarted by higher steel prices.
He also emphasized that these steel tariffs come alongside duties slapped on a wide swath of products from around the world, including aluminum, cars and most merchandise from key trading partner China. The threat of even more tariffs still exists, he added, as the 90-day pause on Trump's harsh and wide-reaching "reciprocal tariffs" is technically set to end in July.
"Yes, tariffs on steel should be good for Nucor in a vacuum," he said. "But we don't live in a vacuum, people. There are other forces at play here."
Nucor did not immediately respond to request for comment.
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