The bank warns that Trump’s proposed 25% tariffs on steel and aluminum imports from Canada and Mexico will drive up prices for these metals and could significantly affect the supply chain.
Aluminum and steel will be the metals most affected by the threat of president-elect Donald Trump to impose 25% tariffs on imports from the main suppliers, Canada and Mexicoaccording to Citigroup analysts.
The US’ two main trading partners are the largest suppliers of these metals to the country, and Trump’s plan to impose tariffs on imports will result in higher steel and aluminum prices across the United States, according to analysts led by Alexander Hacking. .
The United States imports about 70% of its aluminum, of which 60% comes from Canada. Steel imports account for 24% of US supply, with Canada providing a quarter of the amount and Mexico around 15%, according to data from the Bloomberg agency.
A 25% tariff, like the one Trump announced on Monday, will likely push steel prices up between $100 and $150 per short ton, analysts said in a Nov. 26 note. For U.S. aluminum prices, the Midwest premium over the London Metal Exchange could more than double to as much as 50 cents more, a move that could benefit six U.S. smelters. However, analysts warned that “it could take years to reorganize this supply chain.”
“Equity investors are likely to be cautious in pricing the duration of any windfall, assuming this is seen as a trading tactic/temporary impact, in our view,” the analysts wrote. “During Trump’s first term, we saw steel buyers grab headlines about tariffs and we would expect something similar this time.”
Mexico’s response
The president of Mexico, ClAudia Sheinbaumsuggested that his country could respond to Trump’s threatened tariffs with levies of its own, warning that the economic consequences would be serious. Since the United States is a net exporter of steel to Mexico, Citigroup said any retaliatory tariffs would hurt US steelmakers the most, especially on rolled products.
Steel China.jpg
Courtesy of El Financiero
Canada considers the United States its largest export market for metals and mineralswith aluminum, iron and steel accounting for almost half of metal shipments, according to the Canadian government. The northern neighbor exported about $59 billion Canadian ($42 billion) in minerals and metal products to the United States in 2022, according to Statistics Canada data.
Source: Ambito
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