Trump’s Proposed Tariffs to Hit Aluminum and Steel the Hardest

Aluminum and steel are expected to be the metals most impacted by Donald Trump’s proposed tariffs on imports from Canada and Mexico. Around 70% of the aluminum consumed in the United States is imported, with Canada supplying 60% of that total. Similarly, steel imports account for 24% of the US supply, with Canada contributing 25% and Mexico 15%.

Trump’s proposed 25% tariff could significantly increase costs, with steel prices projected to rise by US$100 to US$150 per short ton and the Midwest aluminum premium over the London Metal Exchange price potentially more than doubling, surpassing US$50. While higher prices could benefit six US-based smelters, Alexander Hacking, Analyst, Citigroup, cautioned that adjusting supply chains to accommodate these changes could take several years. “Equity investors are likely to view any windfall profits cautiously, interpreting the tariffs as either temporary measures or negotiating tactics,” Citigroup analysts noted. Citigroup cited Trump’s first administration as an example, noting that steel buyers stockpiled materials in response to similar tariffs, a behavior analysts expect to see repeated.

Previously, Minister of Economy Marcelo Ebrard stated that if Donald Trump were to increase tariffs across various sectors, Mexico would respond proportionally. “If a 25% tariff is imposed on us, we will be forced to counter with reciprocal tariffs. As one of the United States’ main trading partners, alongside Canada, any tariff hikes will result in corresponding actions from our side,” Ebrard stated.

Citigroup stressed that as United States is a net exporter of steel to Mexico, reciprocal measures could disproportionately impact American steel mills, especially those producing sheet products. Canada, the United States’ largest export market for metals and minerals, could also face significant challenges. Aluminum, iron, and steel account for nearly half of Canada’s metal exports. In 2022, the country exported approximately US$42 billion worth of metal ores, minerals, and related products to the United States., according to Statistics Canada.