JP Morgan downgrades U.S. Steel citing demand risks from auto-related tariff

Investing.com -- JP Morgan downgraded U.S. Steel to “Neutral” from “Overweight” and cut its price target to $38 from $43, citing softening demand outlook, potential auto-related tariff risks, and uncertainty around the pending takeover by Japan’s Nippon Steel.

The firm said it expects construction demand to face pressure, while auto and appliance demand remain stable near term. However, it warned that tariff risk longer term potentially leads to demand destruction, especially in autos, which make up about 25% of U.S. steel demand.

JP Morgan also flagged that U.S. Steel’s BRS2 facility is still ramping, with full run-rate expected into 2026.Finishing lines are in early stages of the ramp, with NOES qualification ongoing and taking longer-than-anticipated, the analysts wrote.

The note comes ahead of first-quarter results from major steelmakers, including Nucor (NYSE:NUE), Cleveland-Cliffs (NYSE:CLF), and U.S. Steel. JP Morgan lowered December 2025 price targets across its coverage, citing de-rating in valuation multiples and conservative shipment assumptions.

On the pending NSC deal, the firm sees the foreign M&A premium as “off the table,” given growing political scrutiny. We view ADI as a show-me story, JP Morgan said, referring to Advanced Ironmaking, and noted the Trump administration is likely to play a key role in the deal’s outcome.

Shares of U.S. Steel are down 6% since the “Liberation Day” selloff, underperforming both the S&P 500 and XME index.

“We downgrade X to Neutral, with the pending NSC deal seemingly in the hands of the Trump administration as this point,” analyst at JP Morgan wrote.

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