Tariffs Are a Boon for Cleveland-Cliffs

After a blowout earnings report, Cleveland-Cliffs cued Bachman-Turner Overdrive’s You Ain’t Seen Nothing Yet.

On Monday, the steelmaking giant announced an adjusted earnings outlook for 2027 of $4 billion, well exceeding the roughly $2.6 billion consensus expectation on Wall Street, according to FactSet data. The trade war turned out to be very, very good for the company. 

Steeling Home

The $4 billion outlook doesn’t just trounce expectations, it would also handily beat the $1.7 billion in adjusted earnings the company expects this year, if its fourth-quarter projections prove accurate, and would make 2025’s meager $37 million in adjusted earnings look like a rounding error. 

CEO Lourenco Goncalves on Monday credited current trade policy for the boost. “Imports remain approximately 35%-40% below the level that existed before the implementation of Section 232,” Goncalves said on a call with investors after the report. He was referring to the 50% tariffs on steel and derivative products imposed by the White House last year citing national security. That’s bolstered the market for domestic players, and, in its latest quarter, Cleveland-Cliffs is striking while the proverbial iron (and literal steel) is hot:

• Sales volume in the third quarter reached nearly 4.2 million net tons of steel products, up from 4 million a year ago, at an average selling price of $1,177 per net ton, up from $1,032 a year ago.
• That pushed total revenue to $5.6 billion, up 18% year over year and marking the company’s best quarter since the first quarter of 2024. Adjusted earnings, meanwhile, came in at $612 million.

I-80 W, I-75 N: Shares of the company soared more than 16% on Monday following the strong results. Still, Goncalves said there’s room to grow … if the company’s neighbors across Lake Erie and up the Detroit River start playing ball. The CEO called it a “slap in the face” that General Motors manufactures its popular Chevy Trax crossover SUV in South Korea, and bemoaned Ford’s “annoying” design choice to give its F-150 pickup truck an aluminum body. “I hope that the buyers of trucks understand an aluminum vehicle is not a steel vehicle,” Goncalves said, continuing his Billy Bob Thornton moment.