Janice R. Andrews
Aluminum and steel are set to face significant impacts under President-elect Donald Trump’s proposed 25% tariffs on imports from major suppliers Canada and Mexico, Citigroup analysts warn. These measures could reshape the U.S. metal trade landscape, driving up costs and disrupting supply chains.
The U.S. depends heavily on imports for these metals. About 70% of its aluminum is sourced from abroad, with Canada supplying 60% of that. Steel imports make up 24% of the U.S. supply, with Canada providing 25% and Mexico 15%.
If enacted, the tariffs could raise steel prices by $100 to $150 per short ton, according to Citigroup. For aluminum, the Midwest premium over London Metal Exchange prices might surge to 50 cents. While this could benefit domestic producers, including six U.S.-based aluminum smelters, analysts caution that restructuring the supply chain would take years.
Investors are likely to view any profit boosts as temporary, Citigroup notes, especially if the tariffs are seen as a negotiating tactic. Similar past measures during Trump’s first term led to stockpiling by steel buyers, a trend expected to recur.
Retaliation from trade partners poses additional risks. Mexican President Claudia Sheinbaum has warned of potential counter-tariffs, which could hurt U.S. mills, particularly in sheet steel exports. Canada, a key U.S. metal supplier, may also respond. In 2022, Canada exported C$59 billion ($42 billion) in metal-related goods to the U.S., with aluminum, iron, and steel accounting for nearly half.
The proposed tariffs underscore the economic challenges of altering established trade flows, potentially leading to higher costs and strained relations with key North American partners.
