Trump sets 25% tariffs on steel and Aluminum - ING

US President Donald Trump has set a 25% tariff on steel and Aluminum imports. The tariffs will apply to all US imports of steel and Aluminum, including from the country's biggest suppliers of both metals, Canada and Mexico. The duties will also include finished metal products. The new rates will go into effect on March 12. Trump said the new duties are meant to crack down on the efforts of countries like Russia and China to circumvent existing duties, bolster domestic production and bring more jobs back to the US, ING's commodity analysts Warren Patterson and Ewa Manthey notes.

Aluminum is likely to be most impacted by potential tariffs

"However, previous tariffs did not lead to increased domestic Aluminum production. In 2024, the output of the US steel industry was 1% lower than it had been in 2017 before the introduction of the first round of tariffs by Trump, while the Aluminum industry produced almost 10% less. Trump's move comes on top of new 10% tariffs on goods from China. The President has also expanded the tariffs introduced in 2018, which former US President Joe Biden largely kept in place. Exemptions for major suppliers including Canada, Mexico, Brazil and the EU are now removed and the rate of Aluminum imports has been raised from 10% to 25%."

"The US imports substantial amounts of Aluminum and steel from Canada. Approximately half of the US's Aluminum requirements are sourced internationally, with Canada being the largest supplier, contributing 58% of these imports. The United Arab Emirates follows, providing 6%, according to US government data. The US also relies on Mexico and Canada for around 90% of its Aluminum scrap imports. Meanwhile, around 23% of steel imports into the US arrive from Canada, followed by Brazil at 16%, Mexico at 12% and South Korea at 10%."

"Aluminum is likely to be most impacted by potential tariffs on metals with the US importing significant volumes of its Aluminum from abroad. Tariffs would result in higher Aluminum prices in the US, representing a significant upside risk to the US Midwest premium this year. However, the effects on LME prices will be minimal. US tariffs previously had little impact on LME prices. Tariffs also risk demand destruction in the US as the extra costs would most likely be passed on to end consumers."