Reports: US Set To Drop Steel And Aluminum Tariffs On Mexico, Canada

The United States is planning to lift steel and aluminum tariffs on Mexico and Canada, clearing the way for ratification of the so-called "United States-Mexico-Canada Trade Agreement," the replacement for NAFTA, according to a Bloomberg report. The industry reacted to the report with stocks spiking higher for several U.S. steel and aluminum producers.

What To Know

Bloomberg cited unnamed sources as saying the tariffs will be dropped, with federal officials instead taking a stronger stance on enforcement, opening the door to ratification of USMCA.

According to the report, officials are still trying to work out a key issue of an effective date for removing the tariffs.

Senate Finance Committee Chairman Charles Grassley of Iowa said in an Instagram Post earlier this week that if it was true that talks were closing in on lifting the tariffs, it would go a long way to opening the door to completion of the trade deal.

Stocks Move

While these stocks did trade higher after Bloomberg's report first hit, shares were still in the red for the day.

"That’ll be seen as a positive from the NAFTA standpoint, but the big overhang has been the U.S. and China," said Shawn Cruz, senior trading specialist at TD Ameritrade. "This is a little bit of a resolution, it’s a step in the right direction. But the only way it will impact the market is if it leads to the U.S. and Canada presenting a more united front against China in the latest discussion next week at G20."

Shares of U.S. aluminum company Alcoa Corp. AA were down 1.12 percent to $24.70, while United States Steel Corporation X was down 1.78 percent to $14.60 and Timkensteel Corp TMST was down 3.38 percent to $8.58.

Also, Steel Dynamics Inc. STLD was down 2.31 percent at $30.20; Commercial Metals Company CMC was down 6.11 percent to $15.37. Nucor Corporation NUE stock was down 3.31 percent to $53.16. AK Steel Holding Corporation AKS was down 0.43 percent to $2.32.

One metals stock was headed up on Friday, with Arconic Inc ARNC up 0.63 percent to $22.26.

Related Links:

NAFTA No More: The New North American Trade Deal, Explained

US Steel Surges After Q1 Earnings Surprise