President Donald Trump’s proposal of imposing tariff on imported steel and aluminum saw domestic steel stocks rally on Thursday. Although certain quarters feel that this might spark a trade war and disbalance the global economy, eventually affecting profits of exporters, the proposal has been cheered by U.S. steel and aluminum manufacturers.

Domestic steelmakers see this move as Trump’s initiative to revive the steel and aluminum industry that has been declining over the last few decades. Tariff on imported steel and aluminum also makes manufacturers hopeful of more employment in the sector. So it obviously makes good sense now to add stocks from the sector to your portfolio.

Domestic Steel Stocks Rally on Trump’s Announcement

Trump announced on Mar 1 that he would impose hefty tariffs on imported steel and aluminum. An executive order on the proposed tariff of 25% on imported steel and 10% aluminum would be signed in the coming days. The President believes that such a move will help in rebuilding the U.S. steel and aluminum industry that has been treated unfairly by other countries for decades. The announcement may have sparked a debate on a possible trade war but it gave the share price of U.S. steelmakers a shot in the arm.

Close on the heels of the announcement, shares of major steel manufacturers rallied. On Mar 1, shares of AK Steel Holding Corp (AKS – Free Report) rose 9.5% and U.S. Steel Corp (X – Free Report) jumped 5.8%. Nucor Corporation (NUE – Free Report) and Steel Dynamics Inc. (STLD – Free Report) jumped 3.3% and 4.0%, respectively. Shares of aluminum producer Century Aluminum Company (CENX – Free Report) climbed 7.5%, while Alcoa Corp. (AA – Free Report) increased 1%.

While the decision was well received by domestic steel manufacturers and lawmakers, it drew flak from other quarters that fear damage to the U.S. economy. The big fear among investors is that other countries might now take similar retaliatory steps, which will hurt the global economy and trade, eventually affecting profits of U.S. exporters.