One year ago today, the American industrial landscape was fundamentally reshaped by a single morning announcement from the White House. On February 10, 2025, President Donald Trump signed Proclamations 10895 and 10896, a move that sent shockwaves through global markets and sparked a massive rally in domestic steel and aluminum stocks. By reinstating and expanding a 25% tariff on all steel and aluminum imports—notably ending exemptions for key allies like Canada, Mexico, and the European Union—the administration signaled the definitive arrival of a new, hyper-protectionist era in American trade policy.

In the immediate aftermath, the market reaction was swift and polarized. Shares of United States Steel Corporation (NYSE: X) and Cleveland-Cliffs Inc. (NYSE: CLF) skyrocketed as investors bet on a domestic monopoly of the metal markets. However, the surge in raw material costs simultaneously triggered a sell-off in the automotive and appliance sectors, setting the stage for a year of "cost-push" inflation and intense trade negotiations that continue to define the current economic climate in early 2026.

A Decisive Shift in Trade Strategy

The events of February 10, 2025, were the culmination of a weeks-long buildup following the President's second inauguration. Invoking Section 232 of the Trade Expansion Act of 1962, the administration determined that the existing levels of metal imports constituted a threat to national security. Unlike the targeted tariffs of previous years, these proclamations were sweeping: the 25% duty applied not only to raw steel but was expanded to include aluminum and a vast array of "derivative products," ranging from car body stampings to industrial wire and household appliances.

The timeline of that morning remains etched in the memory of many floor traders. By 9:45 AM ET, as the ink was still drying on the proclamations, trading desks were flooded with orders for domestic mills. The American Iron and Steel Institute (AISI) immediately threw its weight behind the move, with President Kevin Dempsey describing it as an essential step toward correcting a "global playing field" skewed by foreign subsidies and overcapacity. Conversely, trade partners were blindsided; by that afternoon, officials in Ottawa and Mexico City had already begun drafting retaliatory measures, marking the beginning of a contentious year for the USMCA agreement.

The Industrial Divide: Winners and Losers

The immediate winners of the tariff announcement were the domestic steel giants. On the day of the announcement, Cleveland-Cliffs Inc. (NYSE: CLF) saw its shares surge, as the vertically integrated producer was positioned to capitalize on the higher price floor for domestic hot-rolled coil. Similarly, United States Steel Corporation (NYSE: X) saw its valuation leap toward the $40 mark, a price level that eventually paved the way for its $14.9 billion acquisition by Nippon Steel in June 2025. Other major players like Steel Dynamics, Inc. (NASDAQ: STLD) and Nucor Corporation (NYSE: NUE) also reached multi-month highs, benefiting from a market that was effectively walled off from foreign competition.

However, the "Trump Tax" on metal created an immediate crisis for downstream manufacturers. The automotive sector, led by giants like Ford Motor Company (NYSE: F) and General Motors (NYSE: GM), saw their production forecasts slashed as analysts calculated the impact of rising raw material costs. Small-to-medium-sized manufacturing firms—those producing metal cans, machinery, and furniture—found themselves in a "margin squeeze," forced to choose between passing 10–15% price hikes to consumers or facing insolvency. By early 2026, the data shows that while steel producers have enjoyed record backlogs, the broader manufacturing sector has faced significant contraction.

Policy Precedents and the Protectionist Pivot

The February 2025 tariffs represented a departure from traditional trade policy, using the International Emergency Economic Powers Act (IEEPA) to bypass many of the standard regulatory hurdles. This aggressive use of executive power fit into a broader trend of "economic nationalism" that has come to define the mid-2020s. The move effectively dismantled the "exclusion process" that had previously allowed some manufacturers to import specialized metals duty-free, forcing a "melted and poured" standard that requires steel to be entirely produced on American soil to avoid penalties.

Historically, this event is often compared to the 2002 steel tariffs or the 2018 trade actions, but the 2025 pivot was far more expansive. It triggered a chain reaction of global protectionism; by late 2025, the European Union had retaliated with tens of billions in duties on American goods, and China had tightened its grip on the export of critical minerals like tungsten. The 25% baseline established on that February morning was eventually doubled to 50% for many categories by June 2025, solidifying a "Great Metal Wall" around the American economy.

Looking Ahead: The 2026 Legal Battle

As we enter February 2026, the long-term viability of these tariffs is being tested in the highest court in the land. The U.S. Supreme Court is currently reviewing Learning Resources v. Trump, a consolidated case brought by a coalition of manufacturers challenging the President's authority to impose such sweeping tariffs under national security pretexts. A ruling is expected by the summer, and a decision against the administration could lead to the refund of billions of dollars in collected duties, potentially sending steel stocks into a tailspin.

In the short term, the domestic industry remains in a state of consolidation and adaptation. With Nippon Steel now managing the former assets of U.S. Steel and Cleveland-Cliffs focusing on its iron ore integration, the sector is leaner but more vulnerable to domestic demand fluctuations. Investors are closely watching the upcoming earnings reports from Cleveland-Cliffs Inc. (NYSE: CLF) on February 9, which will provide the first clear picture of how domestic demand is holding up under the weight of sustained 50% tariff levels.

Summary and Final Thoughts

The surge in steel stocks on February 10, 2025, was more than just a market rally; it was the starting gun for a fundamental reordering of global trade. For investors in domestic mills, the past year has been one of unprecedented protection and windfall profits. For the American consumer, however, it has been marked by rising prices for everything from trucks to refrigerators.

Moving forward, the market must navigate a landscape of high interest rates, trade volatility, and the looming Supreme Court decision. While the "America First" strategy has successfully boosted domestic production capacity and led to billions in new mill investments, the question remains whether the broader economy can sustain the cost of its own protection. Investors should watch for any signs of a "Greenland-style" trade thaw with other allies, which could signal a softening of the tariff regime in the months to come.

This content is intended for informational purposes only and is not financial advice.