Citigroup: Trump Tariffs to Drive Up Aluminum, Steel Prices
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President-elect Donald Trump’s plan to impose 25% tariffs on all goods from Canada and Mexico will push up steel and aluminum prices across the U.S., according to Citigroup analysts.
Aluminum and steel face the biggest impacts in metals from Trump’s tariff threat since Canada and Mexico are top suppliers to the U.S., according to analysts led by Alexander Hacking. The U.S. gets about 70% of its aluminum from abroad, with 60% of that from Canada. Steel imports account for 24% of U.S. supply, with Canada providing about a quarter of the amount and Mexico about 15%.
A 25% tariff as announced by Trump on Nov. 25 would likely cause steel prices to rise by $100 to $150 a short ton, the analysts said in a Nov. 26 note. For aluminum, a U.S. premium over London Metal Exchange prices could more than double to as much as 50 cents extra per metric ton — a move that could benefit six U.S. domestic smelters. Still, the analysts warn “it could take years to reconfigure this supply chain.”
Mexican President Claudia Sheinbaum has suggested her country could respond to Trump’s threatened tariffs with levies of its own, warning the economic consequences would be dire. Given that the U.S. is a net exporter of steel to Mexico, Citigroup analysts said any retaliatory tariffs would hurt the U.S. mills more, especially in sheet products.
Canada counts the U.S. as its biggest export market for metals and minerals, with aluminum, iron and steel making up almost half of metals shipments, according to the Canadian government. The northern neighbor exported about C$59 billion of metal ores, minerals and metal-and-mineral products to the U.S. in 2022, according to Statistics Canada data.
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