Why Cleveland-Cliffs Stock Was a Massive Winner in June

Core Viewpoint - Cleveland-Cliffs stands to benefit significantly from President Trump's recent steel tariff increase, which has led to a notable rise in its stock price, despite the company's recent financial struggles [1][4]. Group 1: Tariff Impact - President Trump reinstated a 25% tariff on all foreign steel on February 10, 2024, and subsequently doubled it to 50% effective June 4, 2024 [2][4]. - The new tariff regime includes strict reporting requirements for foreign importers, with severe penalties for non-compliance, which is expected to favor American steel producers like Cleveland-Cliffs [4]. - The aggressive tariff strategy aims to bolster American manufacturing, positioning Cleveland-Cliffs as a key beneficiary due to its status as the largest producer of flat-rolled steel in the U.S. [4]. Group 2: Financial Performance - Cleveland-Cliffs has experienced declining annual revenue over the past two years, reporting a net loss of $754 million on nearly $19.2 billion in revenue for 2024 [5]. - The company has been unprofitable in four of its last five quarters, indicating ongoing financial challenges despite the favorable tariff environment [5]. Group 3: Market Sentiment and Risks - Investor enthusiasm for Cleveland-Cliffs has surged, with the stock trading over 30% higher following the tariff announcement, reflecting confidence in the company's potential to capitalize on the new tariffs [1]. - However, there are concerns regarding the sustainability of the 50% tariff, as negotiations with countries like Mexico could lead to exemptions that would diminish Cleveland-Cliffs' competitive advantage [6][8]. - The potential for tariff reductions in future negotiations raises uncertainty about the long-term benefits for Cleveland-Cliffs and the broader American steel industry [7][8].