Industrial metals have had a volatile start to the year driven by tariff risks.
Over the weekend, President Trump announced he plans to impose 25% tariffs on all imports of steel and aluminium into the US. Trump said the tariffs would apply to imports of both metals from all countries, including major suppliers Mexico and Canada. He didn’t specify when the duties would take effect. Trump also said he would announce reciprocal tariffs this week on countries that tax US imports.
It is still uncertain whether the tariffs will go ahead. Only last week, Trump delayed plans to hit Canada and Mexico with general import duties of 25%, while proceeding with a 10% levy on all shipments from China. Beijing retaliated immediately by imposing a range of tariffs on US products. Trump also hinted at tariffs on imports from the European Union. There is a possibility that these tariffs are used as a negotiating tactic and are relaxed following concessions from target countries. There also might be exemptions to those tariffs. This uncertainty will continue to weigh on sentiment.
The US imports significant volumes of aluminium and steel from Canada. The US imports roughly half of its aluminium needs from abroad, with Canada the biggest supplier, accounting for 58% of imports, followed by 6% from the United Arab Emirates, figures from the US government show. The US also relies on Mexico and Canada for around 90% of its aluminium scrap imports.
Meanwhile, around 23% of steel imports into the US arrived from Canada, followed by Brazil at 16%, Mexico at 12% and South Korea at 10%.
Industries like automotive and manufacturing in the US, which heavily rely on imports of aluminium and steel and are deeply integrated with US supply chains, would face increased costs and disruptions if the proposed tariffs went ahead since many parts cross the border multiple times before becoming a final product.
