On Monday, U.S. President-elect Donald Trump announced on social media that he plans to sign a series of executive orders on his first day in office, including a 25% tariff on all imports from Mexico and Canada. Trump’s tariff “big stick” is expected to significantly impact the global commodity market, but according to Citibank analysts, aluminum and steel are likely to be the two metals most heavily affected.
The U.S. counts Canada and Mexico as its major trading partners, and both countries are its largest suppliers of aluminum and steel. Statistics show that approximately 70% of aluminum in the U.S. is imported, with 60% coming from Canada. Additionally, imported steel accounts for 24% of U.S. domestic supply, with Canada and Mexico contributing 25% and 15% of those imports, respectively.
In addition to announcing new 25% tariffs on imports from Mexico and Canada, Trump also stated that he plans to impose an “additional 10% tariff” on all imported goods from China, on top of existing tariffs.
Earlier in September, the U.S. government had already significantly raised import tariffs on Chinese goods in an effort to protect domestic strategic industries. This included a 25% increase on tariffs for steel, aluminum, electric vehicle batteries, and other critical minerals. After the U.S. election results in November, the Chinese government responded by canceling export tax rebates on aluminum and copper, aiming to reduce “excessive competition” in domestic exports while preparing for potential further deterioration in U.S.-China trade relations.
A team led by Citi analyst Alexander Hacking indicated that if Trump’s planned tariffs are implemented, aluminum and steel prices across the U.S. will rise significantly. U.S. steel prices are expected to increase by $100 to $150 per short ton, while the Midwest premium for U.S. aluminum over the London Metal Exchange price could double to as much as $0.50 per pound.
However, analysts believe that the tariff threats are primarily a negotiating tactic and that their impacts on the industry will be temporary. During Trump’s previous term in office, steel buyers stockpiled inventory in response to tariff-related news, and a similar trend may occur this time as well.
Mexican President Claudia Sheinbaum stated that if Trump’s tariff threats materialize, Mexico could enact retaliatory measures but warned that the economic consequences could be severe. According to Citibank, since the U.S. is a net exporter of steel to Mexico, retaliatory tariffs by Mexico could hurt U.S. steel mills more, particularly in the sheet product sector.
Meanwhile, the U.S. remains Canada’s largest export market for metals and minerals. According to data from the Canadian government, nearly half of Canada’s metal exports consist of aluminum, iron, and steel. Statistics Canada reports that in 2022, Canada exported approximately CAD 59 billion (USD 42 billion) worth of metal ores, minerals, and related products to the U.S.
