The news: Morningstar investment research believes US President Donald Trump’s 50% tariff on steel will lead to a short term lift in earnings for BlueScope Steel’s North Star facility in Ohio.
The context: Equity analyst Esther Holloway flagged that the North Star facility, as a price taker, will benefit from an expected increase in spot prices for US Midwest hot rolled coil.
Even though the spot price is about US$100 higher, at US$850 per tonne, since before steel tariffs were introduced in March, Holloway said in a note that “tariffs operate with a lag, and we expect further price rises to follow”.
“Total US steel import volumes in April 2025 were almost one-fifth lower than the prior month, when tariffs came into effect. We anticipate further declines as domestic manufacturers source local steel,” Holloway said.
Shares in BlueScope Steel were up 0.3% to $22.71 at 2:23pm AEST.
The research house has maintained its fair value estimate per share at $20.70. Its forecasts for BlueScope are unchanged and include a tariff-induced earnings uplift for financial year 2026 to 2028.
In the longer run, tariffs are expected to track down due to economic damages.
Previous steel tariffs implemented by Trump during his first term in office resulted in a 50% uplift in North Star’s earnings before interest and tax in financial year 2019.
Trump introduced a 25% tariff on steel and aluminium imports in March before doubling the rate to 50% in June.
The source: Morningstar research