Despite rising aluminium prices for U.S. consumers following Donald Trump’s election win, the increase has been modest, suggesting that the aluminium industry does not anticipate the President-elect will implement his proposed tariffs on Canadian imports.
Key Highlights:
Market Response:
Since Trump’s victory in November, primary aluminium prices in the U.S. have increased, but only by about 12%, equating to 24 cents a lb or $530 a metric ton.
This rise is notably less significant compared to the 90% spike observed in 2018 when Trump first introduced 10% tariffs.
Tariff Threats:
Trump has suggested 25% tariffs on aluminium shipments from Canada and Mexico. Given that Canada is a major supplier, such tariffs could substantially impact pricing.
Analysts, including Jorge Vazquez from Harbor Aluminum, believe that the market is skeptical about the actual implementation of these tariffs, despite their potential to raise premiums significantly.
Historical Context:
In 2018, the aluminium premium surged to $407 a ton as the market began to react to impending tariffs. This time, the expected premium spike could reach 50 cents or more if tariffs are enacted.
Strategic Use of Tariffs:
Analysts suggest that Trump is leveraging the threat of tariffs as a bargaining tool to negotiate on issues like border security and immigration rather than as a definitive economic policy.
Impact on U.S. Consumers:
Canada is the largest source of aluminium for the U.S., with imports estimated at nearly 1.6 million tons, representing 79% of U.S. aluminium imports from January to November last year.
If tariffs are imposed, U.S. consumers could face higher prices for aluminium compared to global markets, according to Dmitri Ceres from PerenniAL.