US industrial metal prices surge amid new tariffs

Industrial metal prices in the US extended gains on Tuesday, reflecting the influence of US President Donald Trump’s 25% taxes on steel and aluminium as an industry will stumble to source sufficient domestic material.

Industrial metal prices in the United States continued their upward trend on Tuesday, following the announcement of 25% tariffs on steel and aluminium by President Donald Trump.

The move aims to support domestic metal producers, but analysts warn of short-term supply shortages as the industry struggles to meet demand.

Immediate Impact on Prices

While the tariffs are designed to revitalize US metal production, reopening closed plants and increasing capacity will take time.

As a result, traders are already raising metal prices in anticipation of the higher costs automakers and manufacturers will pay for imported materials when the tariffs take effect on March 12.

The biggest impact will be on aluminium, which is used extensively in transportation, construction, and packaging.

With imports supplying 82% of US aluminium needs, according to Morgan Stanley, domestic production alone cannot fill the gap in the short term.

Aluminium Prices Surge

The US aluminium premium—the extra cost paid for aluminium in the domestic market—has surged 25% since Friday to 35 cents per pound and has skyrocketed 60% since Trump was elected.

Analyst Volkmar Baur at Commerzbank emphasized the challenge, stating:

“Aluminium capacities would have to be massively expanded in a short period of time to replace even a portion of the imports with domestic production.”

Despite these concerns, the American Primary Aluminium Association welcomed the tariffs.

Mark Duffy, president of the association, said:

“Today is a great day for the U.S. aluminium industry.”

Can the U.S. Meet Demand?

Data from the US Geological Survey highlights the imbalance between domestic aluminium production and demand:

• US aluminium production (2023): 670,000 metric tons
• US aluminium production (2000): 3.7 million metric tons
• US aluminium demand (2023): 4.3 million metric tons

With domestic output far below demand, reliance on imports will continue, at least in the near term.

Looking Ahead

While the tariffs aim to boost domestic metal industries, they may increase costs for automakers, construction firms, and manufacturers.

The long-term impact will depend on how quickly US metal production can scale up to replace imports and whether these tariffs trigger global trade tensions.