Trump’s Tariff Plans Threaten North American Mineral Trade

US president-elect Donald Trump’s plans to impose a 25% tariff on every import coming from Mexico and Canada and the revision of USMCA could have a broader impact on North America’s mineral supply chain. While these measures are not yet a reality, if materialized, they could impact the competitiveness of minerals across the three countries in the context of a trade war between the United States and China. 

On Nov. 29, 2024, MBN reported that aluminum and steel are expected to be the metals most impacted by Trump’s proposed 25% tariffs on imports from Canada and Mexico. The United States relies heavily on imports, with Canada supplying 60% aluminum and 25% steel, while Mexico provides 15% of its steel. Tariffs could result in significant price hikes, with steel prices likely to rise by US$100 to US$150 per short ton and aluminum premiums potentially more than doubling.

As nearshoring and reshoring initiatives aim to keep production within North America, imposing tariffs could pose significant challenges to developing a strong and competitive regional mineral supply chain, potentially making North American minerals less competitive compared to other suppliers. Beyond steel and aluminum, Canada and Mexico are key exporters of essential minerals to the United States, including gold, potash, copper, graphite, and baryte, all of which are critical to industries ranging from clean energy technologies to hydrocarbon processing.

The ongoing trade war between the United States and China underscores the need to strengthen regional mineral supply chains, particularly as China has imposed a ban on the export of critical materials like gallium, germanium, antimony, and superhard materials, and is tightening the review process for graphite items.

Beyond ideological and geographical proximity, USMCA enables the movement of various goods, including minerals, crucial for transformation and integration into the region's manufacturing processes. Experts warn that imposing tariffs or excluding any member from the treaty would disrupt this flow. "If a Canadian mining company (operating in Mexico) sends its production to the United States, it does so tariff-free because it is part of the free trade area, but if it sends it elsewhere, it will have a different tariff regime. Canada should be much more careful about its relationship with Mexico," said César Salazar, Researcher, UNAM’s Institute of Economic Research, in reference to the recent statement by the premiers of Ontario and Alberta advocating for Mexico's exclusion from the USMCA.

Mexico’s Mineral Role in the US Supply Chain

According to S&P Global Market Intelligence, Mexico is among the Top 3 suppliers of 14 of the 58 strategic and critical minerals identified by the United States and is the country’s largest supplier of fluorspar, strontium, and gold. Over the past five years, Mexican production of many of these minerals has increased, positioning the country to potentially capture a larger share of US imports. This is especially relevant for minerals the United States currently imports from China, such as graphite, lead, and selenium. However, challenges remain, particularly in the high-capacity battery sector, where Mexico only produces manganese, with its output still limited compared to major global producers. 

According to CAMIMEX, the United States is one of the primary buyers of Mexico’s copper cathodes and the largest buyer of the refined silver produced in Mexico. Among the leading silver producers in the country are US-based companies, including Newmont, which accounts for approximately 9% of Mexico's total silver production, and Coeur Mining, contributing around 4%.

Regarding graphite, Sonora is the only state in Mexico that produces this mineral, with a potential reserve of over 1.6Mt of amorphous graphite. In 2023, Mexico produced over 1,297t of graphite, with 98% of this output exported to the United States. Additionally, the US purchased more than 53% of Mexico’s refined lead during the same period.