How to Trade Doubled Steel Tariffs: Long & Short Opportunities Emerging
Steel is heating up — and so are the stocks. A new wave of tariff hikes could lead to sharp moves across the entire sector, creating profit opportunities for nimble traders and longer-term investors alike.
In a surprising and aggressive policy move, former President Donald Trump announced plans to double steel tariffs from 25% to 50% if reelected. His stated goal: bolster the U.S. steel industry and reduce reliance on foreign imports. While the announcement hasn’t yet translated into immediate policy, the markets are already reacting — and fast.
“We are going to be imposing a 25% increase. We’re going to bring it from 25% to 50% — the tariffs on steel into the United States of America, which will even further secure the steel industry in the United States,” Trump said, as quoted by NBC Los Angeles.
In response, European officials were quick to criticize the move. The EU warned it could “impose countermeasures”, potentially reigniting a global trade conflict reminiscent of the 2018-2019 trade war period.
So what does this mean for investors?
The Setup: Rising Tariffs, Rising Volatility
Any time tariffs hit, industry players along the supply chain are impacted — some positively, others negatively. U.S. steel producers tend to benefit, at least initially, from rising import costs that hurt overseas competition. But there’s often a short-term pop followed by medium-term uncertainty as retaliation, price inflation, and shifting demand kick in.
That’s why savvy investors are now looking at steel stocks from both sides of the trade: going long on the current momentum, and planning to short once the news-driven boost fades.
Below are a few steel stocks — and one ETF — to consider for both scenarios.
Company: Cleveland-Cliffs (SYM: CLF)Cleveland-Cliffs is the most speculative of the bunch but could also offer the greatest upside if the tariff narrative persists. The stock is trading around $5.83, near lows last seen in 2020 — during the depths of the COVID crash. While recent earnings disappointed, the company has set expectations for a stronger second half of 2025, citing:
Upside Target: $15 — a level it last saw in 2023 before a prolonged downtrend. However, traders should remain cautious. This is a classic “buy the rumor, sell the news” situation. Once the tariff excitement fades — or if it gets delayed or softened — CLF could easily resume its downtrend. A put option strategy or a short position could make sense if momentum reverses. Trade idea: Buy the stock now with a trailing stop. Consider shorting or buying puts if it fails near $10–$12 resistance. |
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Company: Steel Dynamics (SYM: STLD)Steel Dynamics has been one of the more consistent players in the space. The stock recently pulled back to $123.07 after a failed breakout near $137.50, forming a textbook double top. Despite the pullback, fundamentals remain strong:
Steel Dynamics is a solid bet for traders seeking both capital appreciation and dividend income. Its size and vertical integration make it more resilient to short-term noise in steel pricing. Trade idea: Look for a bounce off the $120 support level with a target back to $137.50. A breakout above that could trigger a move into the $145–$150 zone. |
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Trump About to Funnel $100 Billion into This Company?
While everyone and the media is distracted by Trump’s tariffs…
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ETF: VanEck Steel ETF (SYM: SLX) For investors who want exposure without betting on a single stock, the VanEck Steel ETF (SLX) is a compelling option. Currently trading just below $62, SLX offers:
Top holdings include:
This ETF provides broad diversification, reducing the risk that comes with single-stock volatility. It’s ideal for those who believe in a longer-term steel rally but want to smooth out the ride. Trade idea: Consider a position now with a $68–$70 upside target. A move back to previous highs would represent a 10–15% gain, plus dividends. The Short Side: Don’t Ignore ItOne of the most overlooked strategies in situations like this is preparing for the other side of the trade. Once headlines fade and market expectations normalize, many of these stocks — especially the speculative names — could reverse quickly. Tariffs may support steel prices in the short run, but they can also spark higher input costs, retaliatory tariffs, and demand destruction. That’s why it’s smart to:
You don’t have to be a perma-bear to profit from pullbacks. Think of it as trading the cycle — not just the headline. |
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