U.S. President Donald Trump's new tariffs on imported steel and aluminum are creating tremendous profit opportunities in steel and aluminum stocks.
However, the best tariff stock to buy isn't in the steel or aluminum industry - it's a tech company positioned to revolutionize steel production and produce explosive profits while doing it.
You see, while tariffs may boost American steel production in the short term, both American and Chinese steel manufactures are turning to technology in an effort to lower costs, generate sustainable profits, and take advantage of a rapidly changing global economic landscape in the long term.
As Money Morning Director of Technology & Venture Capital Research Michael Robinson points out, "The steel industry is a laggard in part because it hasn't kept up with the times... steelmakers and other metal firms must invest in the innovative digital tech that is transforming so many other industries."
Trump's tariffs are likely to push American manufacturers to modernize their production processes in order to meet the sudden increase in demand while maximizing their profit potentials.
Chinese steel producers are also likely to pursue technological upgrades in order to cut costs, as their margins are squeezed by increased competition from American steel manufactures.
With tariffs pushing both domestic and international steel companies to modernize, there will be immense demand for tech companies that can help steel companies cut costs and become more efficient.
Michael has found a tech company at the forefront of innovating steel manufacturing - a trend Markets and Markets says could net upward of $153 billion annually in the next four years.
Let's take a closer look at the state of the American steel industry, and how Michael's best tariff stock is perfectly positioned to profit from the changing steel production landscape...
Trump's Tariffs Are Accelerating Automation in the Steel Industry
According to Marketline, the global steel industry will be worth an estimated $865 billion in just two years.
However, American steel manufacturers are currently positioned to miss out on this boom entirely. Only one of the world's 12 largest steel manufacturer is currently based in the United States.
Currently, the United States produces 82 million metric tons of steel - a 40% decline from the nation's all-time high of 137 million metric tons in 1973. That's miniscule in comparison to China, which currently produces 837 million metric tons - half of the world's steel supply.
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In fact, Michael argues that China is producing too much steel. The Chinese steel industry has already laid off roughly 1.8 million workers and is selling its product at incredibly low prices in an attempt to compensate for the glut of supply the nation created.
Michael believes that Trump's tariffs will force China to "accelerate its reduction in overcapacity."
And that's where Michael's tech stock pick comes in...
According the Michael, this company is positioned to develop the kind of technology "that unites hardware, software, sensors, robotic systems, and more so that steel factories can operate far more profitably."
With profits of $90 billion on the table, this company is perfectly poised to take advantage of the international steel industry's push to modernize and navigate Trump's tariffs.
Here's Michael's pick...
The Best Tariff Stock to Buy to Profit from the Steel Revolution
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Based in Milwaukee, Wis., Rockwell Automation Inc. (NYSE: ROK) is a technology company that produces sophisticated software and hardware for industrial operations.
According to Michael, Rockwell's value lies in its development of a "manufacturing execution system (MES), which enables steelmakers to precisely monitor every aspect of the production process."
MES tech give steel manufactures the ability to collect data on everything from the efficiency of the smelting process to the effectiveness of the casting and stamping. With access to so much data, steel manufactures will be able to streamline their production processes, cut costs, and boost profits.
And as Michael points out, Rockwell is not only focusing on steel and aluminum producers - the company's revolutionary technology has the potential for application across several industries.
"Rockwell is at the forefront of a new type of 'smart factories,'" he says. "The idea here is to use digital tools, including software packages, sensors, and advanced processors, to make production equipment more intelligent."
Rockwell is specifically building systems that can be incorporated into what's known as the "Internet of Everything" (IoE), a growing network of roughly 50 billion interconnected devices that share and interpret information. According to the McKinsey Global Institute, IoE could contribute more than $6.2 trillion to the global economy by 2025.
Rockwell says that the company's forward-thinking approach to industrial modernization and global interconnectivity has positioned the company to take advantage of a $90 billion market opening.
As Michael puts it, "Add it all up, and you can see that we have a backend tech supplier that will play a critical role in the coming rebirth of American steel."
And while tariffs will help boost the American steel industry in the short term, the technological advantages provided by Rockwell and its MAR system will sustain the steel industry well into the future.
In its last earnings report, Rockwell raised its forecast for this fiscal year's income to 16% higher than previously announced, suggesting that the company's growth is accelerating.
Rockwell's board of directors also approved a $1 billion share buyback program - a move that will reward shareholders and indicates a strong economic outlook.
The company currently trades for $178.90. However, with such strong growth prospects on the table, analysts see the company heading to $232 - an increase of 30%.
While Rockwell's profit potential is exciting, it's not the only way to play the incredible power of new technology...
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