Trade tariffs, including US tariffs on Canada and Mexico metals, are significantly reshaping the metal markets, driving price volatility, supply challenges, and operational uncertainty across industries.
- The United States has implemented a 25% tariff on Canadian and Mexican goods, with retaliatory tariffs impacting trade.
- Steel and aluminum have experienced price spikes, supply uncertainty, and increased costs for U.S. stakeholders.
- Tariffs on copper and aluminum imports are affecting exemptions and U.S. mills.
- The base metals market is seeing fluctuating prices, prompting traders to take a cautious “wait-and-see” approach
US President Donald Trump hit traditional free-trade partners Canada and Mexico with 25% tariffs on a broad spectrum of goods on Tuesday March 4, prompting swift condemnation from the leaders of both countries.
As of March 4, the Canadian government has levied retaliatory tariffs set to exceed an estimated $100 billion worth of US imports, with Mexico’s administration expected to hit back with measures of its own on Sunday March 8.
China, which does not form part of the North American free-trade cohort, but whose specter looms large over global metals markets, has been slapped with an additional 10% tariff on top of the 10% tariff levied on February 1; the country has now retaliated in kind twice, bringing its own retaliatory tariff to a matching 20%.
The implications of these protectionist measures are roiling US metals supply chains with uncertainty for the second time in as many months.
Trump tied the implementation of the tariffs — which were originally slated to take effect on February 1 — to an alleged lack of enthusiasm for policing drugs and migrants flowing through both borders.
“Both nations’ failure to arrest traffickers, seize drugs or coordinate with US law enforcement constitutes an unusual and extraordinary threat to America’s security — demanding IEEPA [International Emergency Economic Powers Act] action to force accountability and protect American lives,” according to a statement from the White House on Monday March 3.
Canada pushes back against tariffs as Mexico vows strong countermeasures
The Canadian government hotly denied the allegations and promised swift retribution.
“Let me be unequivocally clear — there is no justification for these actions,” Canadian Prime Minister Justin Trudeau said in a statement late on Monday, citing a laundry list of anti-drug measures introduced by Canada to the border region.
“Canada will not let this unjustified decision go unanswered. Should American tariffs come into effect tonight, Canada will, effective 12:01am [Eastern Standard Time on March 4], respond with 25% tariffs against $155 billion of American goods — starting with tariffs on $30 billion worth of goods immediately, and tariffs on the remaining $125 billion on American products in 21 days’ time,” Trudeau said. “Because of the tariffs imposed by the US, Americans will pay more for groceries, gas and cars, and potentially lose thousands of jobs. Tariffs will disrupt an incredibly successful trading relationship. They will violate the very trade agreement that was negotiated by President Trump in his last term.”
Mexican President Claudia Sheinbaum echoed the sentiment in a speech early on March 4, also promising retaliatory tariffs on the US.
“Mexico must be respected… Its people are brave,” Sheinbaum said. “We know that when our people unite around their history, their country and their flag, there is no force in the world that can break their spirit.”
A familiar steel Steel industry prepares for tariff upheaval
Steel market participants have displayed a mixed reaction to the news, which appears to be adding fuel to the pricing fire.
In July 2018, Fastmarkets’ daily steel hot-rolled coil index, fob mill US hit a nearly 10-year peak of $45.84 per hundredweight ($916.80 per short ton) following the introduction of the 25% steel tariffs.
The index stood at $45.08 per cwt on Tuesday.
“Looks like the madness is just beginning,” one flat steel distributor said.
A second distributor added that the price spike affecting nearly all steel products may well be temporary, depending on how Canada and Mexico react to a shuttered US market.
“In the short term, we will see prices hold,” the second distributor said. “People have run inventories down and are buying Q2 tons now to avoid price increases. It will cause a short-term shortage and a spike in pricing. Long-term — probably no
The future of scrap import exemptions in question
Unlike finished steel and primary aluminium imports, scrap imports into the US were subject to wide-reaching exemptions in the first iteration of Section 232 tariffs in 2018. The second tranche comes into effect on March 12, 2025, and with it possible changes for scrap.
Key distinctions are emerging regarding the category of scrap imported into the US as well as the nature of the tariff — whether the tariff pertains to the re-levying of Section 232, or the fresh levying of broad tariffs on imports from Canada, China or Mexico.
Indeed, following an executive order signed on February 25, which opened an investigation into the national security implications of copper imports, recycled copper has been added to the list of affected materials — the first recycled metal officially implicated in Section 232. Scrap as a broad category had previously been subject to successful exemption.
“[We are] going to assume [the tariff is] real and will happen until told otherwise,” a copper scrap source said in the week to February 26, noting market reluctance to buy material from non-US suppliers.
“[Some suppliers in Canada were] working off the assumption that copper scrap would be exempt [from potential tariffs],” they said, adding that said supplies have now had to pivot following the executive order.
The so called broad-based “border” tariffs levied on Mexico and Canada will have implications for imports of ferrous and non-ferrous scrap and pig iron.
There are also no “on the water” exemptions for material already in transit, due to the one-month gestation period given after the initial border tariffs were announced, leaving importers of material awaiting shipments with additional costs already.
Fastmarkets understands that certain US steel mills are working to gain exemptions, the status of which are unknown. Some participants doubt that they will be forthcoming.
So ferrous scrap market participants once more find themselves on the precipice of a monthly trade stung by tariff implications.
Unlike February’s trade, which had pricing expectations on ferrous scrap calm after February 1’s tariffs were met with a 30-day reprieve two days later, participants are set to begin March negotiations against a backdrop of newly-minted 25% tariffs on Canadian and Mexican material imports.
While the US is a venerated net exporter of scrap material, stateside producers still rely on imports when necessary. The US Midwest is an example of a market that relies on its close proximity to Canadian imports, primarily ferrous scrap, pig iron and hot-rolled coil.
While exports may dwarf imports, the potential for retaliatory tariffs adds a considerable sting for US market participants.
For example, the US imported 2.9 million tonnes of ferrous scrap in 2024 as a whole, the overwhelming majority — 2.2 million tonnes — coming from Canada.
The US conversely exported 13.2 million tonnes. China accounted for a paltry 9,088 tonnes over the period — less than one third of a standard deep-sea handy size cargo.
But Mexico was third in line, behind traditionally largest consumer Turkey and Bangladesh, bringing in 1.69 million tonnes of US material in 2024.
Retaliatory measures from China, Canada and Mexico would also theoretically have severe implications for exports of US non-ferrous scrap exports.
Some sources are skeptical as to how long these tariffs will be in play before negotiations with the countries in question are settled to mutual benefit.
Canadian retaliatory measures do not include recycled materials as of March 4, though further measures may be anticipated, sources told Fastmarkets.
China is now levying 20% tariffs on US material imports, in accordance with US measures against the region.
The country accounts for the majority of US copper scrap exported yearly, recording a tally of 437,314 short tons taken in 2024.
This constitutes 41.35% of the 1.06 million tons of copper scrap exported from the US over the period.
Canada and Mexico are among the largest exporters of aluminium scrap to the US, while China accounts for a comparatively smaller proportion.
The US imported 441,832 tons of scrap aluminium from Canada in 2024, the majority of which was used beverage cans (UBCs) and industrial aluminium scrap.
The US imported 226,085 tons of aluminium scrap from Mexico over the period, with the same grades accounting for the majority.
These account for 59.54% and 30.47% of the 742,108 tons of aggregate imports over the period.
“If [tariffs] move forward one way or another, premiums [will go] up, and [scrap] spreads will widen,” an aluminium scrap source said on February 26, adding that there are currently “lots of red lights on the economic dashboard.”
Fastmarkets last assessed the aluminium scrap used beverage cans, domestic aluminium producer buying price, fob shipping point US at $1.14-1.18 per lb on Feburary 27. The price has been inching up over the first two months of 2025 alongside new tariff discussions. Sources have noted that increasing P1020A premium rates as a result of impending tariffs have been pushing up UBC and mill-grade aluminium scrap pricing, which is expected to continue while premiums keep climbing.
The US exported 1.8 million tons of aluminium scrap (excluding UBCs) in 2024; 125,755 tons to Canada, 95,781 tons to Mexico and 50,944 tons to China.
“[The market is] all up in the air,” a US aluminium source said on February 26. “[But we will not] know the real effects until the tariffs are fully enacted. The underlying supply/demand dynamics haven’t changed — everything is tariff-related.”
Tariff impact on copper, zinc, nickel, lead, and tin with market uncertainty ahead
Across US base metals markets, participants have had all eyes on tariffs since the inauguration. Due to the quickly changing, back-and-forth nature of announcements, market sentiment was cautious as uncertainties rose. But this attitude led to a cautiousness within the premiums as well, with most base metals premiums experiencing no significantly out-of-the-ordinary changes as of Tuesday.
The US special high grade (SHG) zinc market has had the most movement, as steel tariffs have been much talked about and were among the first to be announced, and the primary use of SHG is for galvanizing steel. SHG market participants adopted a wait-and-see attitude for much of the month between January 20 and February 18, and while chatter continued to rise until the February 10 announcement, the premium remained relatively stable, tightening up about a half a cent per week from then onward.
Market participants predicted that this would be the trend through the end of the month, with the high remaining around 20 cents per lb or slightly higher. Fastmarkets’ most recent assessment of the zinc SHG min 99.995% ingot premium, ddp Midwest US was 18.00-20.50 cents per lb on Tuesday, stable from February 25.
Last week, the International Zinc Association (IZA) held its annual International Zinc & Zinc Oxide conference in San Diego, California. As Fastmarkets anticipated, tariff talk took center-stage at the event.
“This would have been a very different conference three weeks from now,” one market participant said, and joking comments of a similar nature among panelists were common throughout the event. In the majority of panels, the timeliness of presentations and volatility of numbers due to tariff concerns — which have been ever-present since the inauguration of US President Donald Trump in January — were noted.
While many participants agreed that the SHG range in the US has been consistently tightening up, there was also a widespread sentiment that the market is volatile now, and may be for some time.
“This has been a disruption to the market, and we won’t see it balance out again for a while,” another source told Fastmarkets.
“US zinc reliance on imports is anywhere from 77-82%, which is huge,” one market participant told Fastmarkets on Monday. “Copper, on the other hand, is somewhere between 46-50%, which is still pretty big. My point is that any copper tariff reaction is going to generate the benchmark model, which will only be amplified, should or when zinc gets hit.”
According to this source, one of the few things that move the global needle is how the US zinc deficit is managed when the two countries who supply the majority of the US “need [to] get neutralized, or at least compromised.”
When Trump’s announcement of a potential copper tariff was announced, the US copper cathode market adopted a similar attitude to that of zinc sources over the last few weeks.
“There is so much unknown at this point,” one trader told Fastmarkets when talk of the copper tariff was first arising in February. “Rumors abound and facts are difficult to find.”
Market participants agreed that it was too soon to tell what would happen to the copper premium, right up to the pricing session ended on Tuesday. Fastmarkets’ assessment of the copper grade 1 cathode premium, ddp Midwest US was 11.50-13.50 cents per lb on Tuesday, flat from the week prior.
“There is no change to the copper premium with the tariffs right now. Nothing is going on. The real danger is how long will this be going on — it’s too soon to gear up to a long-term situation right now,” a trader said on Monday.
“I thought for sure we would have heard something, or at least get a pulse check to see what we already have in the US warehouses,” one seller said on Monday. “Equally surprising is that after a surge of calls and texts received after the Canada/Mexico tariff postponement announcement, and then correction, I was really anticipating a rush of panic by our customers ahead of tomorrow’s re-initiation deadline.”
But this was not the case, and the lack of more animated reactions from customers led the seller, and many others, to believe there will be a delayed impact to the premiums.
“For now, all I can say is none of the base metals have gone down and the tariff will likely eventually lead to a spike. But that’s future talk… no change on any of the ranges this week,” the seller said.
Meanwhile, the nickel and lead markets were seemingly unaffected by tariff news in the pricing session ended on Tuesday.
“Nickel is much quieter, with all eyes on the Canadian… tariff extension, which as you know is pivotal for the US,” a trader said. “End users are concerned and checking their contracts, but there’s no real panic buying out there [right now].”
Some traders were surprised at this lack of reaction.
“The premiums seem unchanged, but very little is going on,” a second trader said. “It is surprising that the market hasn’t reacted to the potential of tariffs. Just look at copper.”
Fastmarkets’ assessment of the nickel 4×4 cathode premium, delivered Midwest US was assessed at 40-50 cents per lb on Tuesday, unchanged since November 19.
And the nickel briquette premium, delivered Midwest US was assessed at 30-40 cents per lb on Tuesday, also unchanged since December 31.
Likewise in lead, the 99.97% ingot premium remained unchanged, with market participants largely unconcerned about tariff impacts at this time. Fastmarkets assessed the lead 99.97% ingot premium, ddp Midwest US at 13-16 cents per lb on Tuesday, unchanged since November 26.
In tin, while some market participants believed the premium would soon soften, citing a stocking-up of material in response to the tariffs, others confirmed sales at the high end of and above the previous range.
“[There are] lots in warehouses at the moment because of people responding to Trump’s election by stocking up on material. In a few months’ time, this will change,” one seller told Fastmarkets in February.
Fastmarkets assessed the tin 99.85% ingot premium, in-whs Baltimore at $1,450-1,600 per tonne on Tuesday, up from $1,350-1,550 per tonne on February 4.
And the monthly tin grade A min 99.85% ingot premium, ddp Midwest US was assessed at $1,550-1,660 per tonne on Tuesday, up from $1,450-1,660 per tonne previously.
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