President Donald Trump’s recent tariffs have created an opportunity for investors to buy into shares of Steel Dynamics and Nucor , according to UBS. The bank upgraded the steel producers to buy from neutral. It maintained its price target of $149 for Steel Dynamics, which implies 21.5% upside from Friday’s close, but increased its target on Nucor by $4 to $160. That implies more than 31% upside ahead. “Since the election, tariff protection for US steel & aluminum has exceeded our expectations, resulting in a significant rally in HRC prices,” analyst Andrew Jones wrote in a note to clients on Monday. HRC is hot-rolled coil coil steel. “At the same time, the stock has sold off and de-rated with the sell off in the broader market on the escalating trade war,” the analyst also said regarding Steel Dynamic’s upgrade. “We think any demand downside is likely to be partly offset by reshoring efforts (inc 25% on downstream goods) and the import protection is more significant.” Steel Dynamics and Nucor have fallen more than 9% and more than 11%, respectively, month to date amid a monthlong rout in the broader market, which was kicked off when Trump earlier this month imposed 25% tariffs on goods from Canada and Mexico as well as an additional 10% tariff on Chinese goods. While tariff exemptions on some Canadian and Mexican goods were granted until April 2, the president’s 25% tariffs on steel and aluminum imports ultimately took effect , impacting Canada, Australia and the European Union, among others. STLD NUE mountain 2025-03-01 STLD vs. NUE, month-to-date The analyst notes that steel futures prices have risen to $945 this year as buyers have sought to replace lost or more expensive import volumes. Although he believes that prices could stay around these levels or even increase in the near term, he expects that steel prices will eventually return to $800 per short ton in 2026 to 2028. Additionally, Jones said that Steel Dynamic’s organic growth in particular should lead to “generous” cash returns, forecasting free-cash-flow yields rising to 10% to 14% by 2026 to 2028. Meanwhile, Nucor’s products business could be a beneficiary of 25% tariffs on downstream goods, according to Jones, and he sees medium-term growth ahead for that name as well. This year, however, the analyst anticipates that U.S. steel demand will drop about 1%, saying that the first half of 2025 will continue to have a “weak” demand environment. That said, he believes the second half of the year will see demand benefit from catalysts like a recovery in traditional end markets and federal stimulus. “We (and main UBS steel end market analysts) assume a relatively sensible resolution to the trade war with Canada/Mexico given the unpracticality of the tariff imposition,” he also said. “However, even in the scenario of 25% tariff imposition, we see some offsets from reshoring of some steel intensive production and do not see demand falling > 5%. Benefits from import relief (e.g. 50% CAD/MEX tariffs could take ~3mt net steel imports out of the market) should support domestic shipments and the supply curve should support HRC prices in the $800’s.” Wall Street is pretty split on Steel Dynamics, with seven out of 15 analysts covering it having a strong buy or buy rating, according to LSEG data. Another seven have taken a neutral stance with a hold rating. For Nucor, analysts are a bit more bullish, as nine out of 16 covering that name have a strong buy or buy rating. Shares gained more than 1% for Nucor and about 2% for Steel Dynamics in premarket trading Monday on the heels of their upgrades.