Aluminum and steel will be the metals to be hit hardest by U.S. President-elect Donald Trump's threat to impose 25 percent tariffs on all imports from major suppliers and trading partners in the USMCA, Canada and Mexico, according to news reports citing an analysis by financial giant Citigroup.
Mexico and Canada are the largest suppliers of metals to the United States, with Trump's threat to impose tariffs from his first day in office likely to result in higher steel and aluminum prices in the United States, according to the financial group's research report cited by Bloomberg news agency.
The United States sources about 70 percent of its aluminum from abroad, with 60 percent of that aluminum coming from Canada. Steel imports account for 24 percent of the US supply, with Canada providing a quarter of the amount and Mexico about 15 percent.
The 25 percent tariff announced by Trump on Monday will cause steel prices to rise by $100 to $150 per short ton, the analysts’ Nov. 26 report said. In the case of U.S. aluminum prices, the Midwest premium over the London Metal Exchange could more than double to 50 cents higher, a move that could benefit six US smelters.
Still, the analysts cautioned that “it could take years to reconfigure this supply chain. Equity investors would likely be cautious about pricing in the duration of any windfall, assuming this is viewed as a negotiating tactic or temporary impact, in our view. During Trump’s first term, we saw steel buyers stockpile ahead of tariff headlines and would expect something similar this time around,” the analysts wrote.
Mexican President Claudia Sheinbaum has suggested her country could respond to Trump’s threatened tariffs with its own levies, warning that the economic consequences would be dire. Since the United States is a net exporter of steel to Mexico, Citigroup said any retaliatory tariffs would hurt American smelters the most, especially on rolled products.
According to the Canadian government, the United States is Canada’s top export market for metals and minerals, with aluminum, iron and steel accounting for nearly half of metal shipments. The northern neighbor exported about $42.0 billion worth of metal ores, minerals and metal and mineral products to the United States in 2022, according to Statistics Canada data.