U.S. steel and materials stocks swing amid U.S.-Canada trade war

U.S. steel and materials stocks swing amid U.S.-Canada trade war

Mon, August 31, 2026 at 3:48 PM GMT+3 3 min read

Steel and aluminum stocks surged and then retreated last week as the escalating trade war between the United States and Canada sent investors scrambling to reprice exposure to North American metals supply chains.

SLX gained 1.6% on Monday, Aug. 25, following the breakdown of U.S.-Canada trade talks, and the State Street Materials Select Sector SPDR (XLB) reached a new intraday record that session, topping the peak it had set in February. Shares of Nucor, Steel Dynamics, Cleveland-Cliffs, and Century Aluminum all climbed. The gains proved short-lived, however: by Friday's close, XLB had slipped into the red for the week and SLX was essentially unchanged, according to CNBC. Through Aug. 28, Morningstar data show SLX has gained more than 28% on the year and XLB more than 18%.

The swing reflects the complexity of a trade war between two countries whose metals industries are deeply intertwined. Dan Luttner, who serves as managing partner of the supply chain consulting firm NEOS by Argon & Company, characterized the initial stock move to CNBC as a repricing reflex rather than a durable signal. "The stock pop is a headline reflex, honestly — mills reprice to replacement cost the second a 50% wall goes up, so of course Nucor and Cleveland-Cliffs jumped," Luttner said. "But that's not the interesting question. The interesting question is who controls their feedstock inside the wall versus who's still exposed to it?"

Luttner noted that both Nucor and Cleveland-Cliffs use electric arc furnace technology whose inputs have no dependence on Canadian ore or slab, positioning them to capture tariff-driven pricing benefits without the same exposure. Cleveland-Cliffs stock is nonetheless in negative territory for 2026 because of balance sheet stress. Century Aluminum is a more complicated case: because domestic primary aluminum production is thin, the raw inputs that sustain it — alumina and semi-finished material — largely still flow across the Canadian border, undermining the protection the tariffs were meant to provide.

Atsi Sheth, chief credit officer at Moody's Ratings, said uncertainty will persist. "Expect much more of this uncertainty for some time to come," Sheth said. She added that U.S. steel companies hold a modest edge over their Canadian counterparts because the U.S. market is larger, but said the auto sector has no clear winner given how deeply integrated cross-border production is.

Scott Beaulier, a University of Wyoming economics professor who also serves as dean of the College of Business, urged caution against drawing firm conclusions from early stock moves. "I'd be cautious about treating an initial pop in metals stocks as evidence of a durable economy-wide gain," Beaulier said, noting that new aluminum smelting capacity takes years rather than months to build.

Canada announced counter-tariffs on $27.6 billion worth of American goods last Tuesday, matching a 50% U.S. tariff on Canadian exports that took effect the prior Saturday. Scheduled to kick in on Sept. 8, the Canadian measures apply to more than 700 categories of American goods, with duty rates of 15%, 25%, or 50% falling on products ranging from dairy and seafood to appliances and steel. Canada suspended trade talks after saying Washington proposed terms it deemed unacceptable. President Donald Trump has separately threatened to raise tariffs on Canadian autos, trucks, and steel to 50% on Jan. 1, 2027.