From Rust To Rally: Trump's Tariffs Ignite Cleveland-Cliffs Comeback
CANADA - 2025/03/23: In this photo illustration, the Cleveland-Cliffs logo is seen displayed on a ... More smartphone screen. (Photo Illustration by Thomas Fuller/SOPA Images/LightRocket via Getty Images)
President Donald Trump's recent announcement to increase tariffs on imported steel and aluminum from 25% to 50%, effective June 4, 2025, has significantly influenced U.S. metal stocks. The rise in tariffs has strengthened U.S. metal producers by decreasing foreign competition and increasing domestic prices.
The most significant increase can be observed in Cleveland-Cliffs (NYSE:CLF), as its stock price surged about 33% during pre-market trading on Monday, following the tariff announcement. As a vertically integrated producer, Cleveland-Cliffs is strategically positioned to benefit from heightened demand throughout the steel production chain. Nucor Corp (NYSE: NUE) shares are also up around 13% in pre-market trading on Monday. United States Steel stock (NYSE:X) has increased by 22% over the past week and is up nearly 65% year-to-date. When a single product accounts for nearly half of total sales, diversification becomes a pivotal factor. Therefore, our High Quality (HQ) portfolio stresses a balanced mix across sectors. This diversified strategy has enabled the HQ portfolio to surpass the S&P 500, yielding returns exceeding 91% since its inception. Additionally, check out – Buy, Sell, or Hold CLF Stock?
CLF stock has decreased by 66% over the last year and approximately 76% over the past three years. Some of the decline in recent years can be attributed to the average 6% decrease in CLF's revenues from 2022 to 2024. Revenue fell by roughly 15% in the last twelve months.
Cleveland-Cliffs experienced revenue growth from 2021 to 2022, but since then has followed a downward trend, and its PS multiple has also dropped. The company's PS multiple shifted from 1.1x in 2020 to 0.48x in 2023. Although the company's PS is currently at 0.2x, there is potential for upside when comparing the current PS to levels observed in previous years.
For the first quarter of 2025, CLF reported revenues of $4.6 billion, an increase from $4.3 billion in Q4 2024. The company reported a net loss of $483 million, equivalent to $1 per diluted share. The company attributed its underperformance to underutilized non-core assets and the lingering effects of historically low steel prices. In response, Cleveland-Cliffs announced plans to temporarily close several facilities, including two iron mines in Minnesota and multiple steel processing units in Michigan, Pennsylvania, and Illinois. Furthermore, the company has paused capital spending on a transformer facility in Weirton, West Virginia. These actions are expected to save over $300 million each year. See our analysis on Cleveland-Cliffs Valuation: Is CLF Stock Expensive Or Cheap? for more insights into what is influencing our valuation for Cliffs. Check out our analysis of Cleveland-Cliffs Revenue for more information on the company's primary revenue streams and their anticipated trends.
While these metals and mining stocks like CLF are currently gaining, the long-term impact will hinge on whether the tariffs are sustained, how global markets respond, and if domestic production can fulfill demand without significantly increasing costs.
Investors should weigh the company's strong recent performance against the real challenges ahead. Diversification of investments—across sectors and stocks—is vital to mitigate this kind of concentration risk. Our Trefis High Quality (HQ) portfolio is developed based on that principle, outperforming the S&P 500, Nasdaq, and Russell 2000 with returns exceeding 91% since inception. This balance of risk and reward underscores the importance of diversification.
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