U.S. steel stocks rose on Monday on news that President Trump said he was resuming steel import tariffs on Brazil and Argentina in retaliation for the devaluation of the currency.

But analyst Tyler Kenyon warned that given the small size of the Brazilian and Argentine markets, investors should not use tariffs as a key factor in improving steel companies' operations. In fact, tariffs can end up being negative because they can lead to higher production costs.

"We believe that tariffs are a negligible boost to steel supply and steel mills, where refined steel powder accounts for less than 4% of imports," Kenyon wrote in a report to clients. The duration of the tariff and its impact on other trade arbitration and renegotiation are "key unknowns", which may change the pattern of demand and trade in finished steel products. If the tariff on Brazil is extended, the production cost of U.S. slab continuous rolling company may be increased in 2020. This leads to a lower cost of production compared to the rest of the world. If the tax rates of other foreign sources of U.S. steel sheet supply are not adjusted accordingly, this may prompt more finished steel sheet and steel sheet imports back to the United States.