It seems that it is not the ideal time to restrict the supply of basic commodities. But this is an abnormal result of the US steel market, because the growing economy is in conflict with maintaining trade protectionism.

President Donald Trump imposed a 25% tariff on steel imports in 2018 in order to appeal to his political foundation. But this year, the demand for durable goods such as automobiles has soared that the price of steel at about US$1,500 per ton is three times what it was a year ago.

Even so, the American steel industry still believes that there is no reason to return anything. The industry’s capacity has been reduced and consolidated, resulting in fewer and more efficient operators using more automation technology. Although the labor force was exhausted, the surplus power was retained through political unions. In a recent letter to Biden, steel advocates pointed out that supporting domestic industry has led to more investment and job creation. Even if prices and supply remain high for the time being, the threat of overproduction from China and elsewhere still exists.

Not surprisingly, the share prices of U.S. Steel, Nucor and Cleveland Cliffs have soared, doubling so far in 2021.As US President Joe Biden seeks to ease tensions with allies and pursue a more robust economic policy, Trump’s tariffs may be heading Cutting board. Nevertheless, the political nature of this decision is trivial and complicated.

Good for the input industry means bad for downstream customers. Manufacturers such as General Motors have complained about rising prices and shortages of raw materials such as semiconductors and steel. However, so far, manufacturers have passed the cost on to the final consumer. In addition, countries that target tariffs can choose to retaliate. The European Union threatened to do so, but as the negotiations progressed, the country postponed action.

US Steel said its adjusted profit before interest, taxes, depreciation and amortization in the first quarter reached 551 million U.S. dollars, a sharp drop from the 750 million U.S. dollars before the third quarter. The company hinted that the second quarter will be stronger. Nevertheless, analysts expect that as supply increases or demand slows, commodity prices will eventually slow down. Nucor’s Ebitda valuation multiple has approached historical lows, indicating that the market also has doubts about steel prices.

After the trillion-dollar infrastructure plan is passed, another impetus for the steel industry may come. The golden age of steelmaking may have arrived, and this is the ideal time for Uncle Sam to stop tilting the scale to win the favor of manufacturers.

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