The prices of metals in the United States are skyrocketing after President Donald Trump announced a 25% tariff on steel and aluminum imports. This move aims to support struggling U.S. metal producers, but it is causing concerns about supply shortages and rising costs across various industries.
The tariffs, set to take effect on March 12, mean that industries like automotive manufacturing, construction, and packaging will have to pay more for the metals they need. The U.S. relies heavily on imports, especially for aluminum, where net imports account for around 82% of the country’s requirements.
“Aluminum capacities would have to be massively expanded in a short period of time to replace even a portion of the imports with domestic production,” said Volkmar Baur, an analyst at Commerzbank.
While some U.S. aluminum producers welcomed the tariffs, others in the industry are worried. The Aluminum Association acknowledged the need for trade actions but emphasized that there isn’t enough smelting capacity in the U.S. to meet demand.
“You can’t cut your nose off to spite your face,” said Brian Hesse, CEO of PerenniAL, a New York-based aluminum distributor. He warned that increasing domestic production needs to be done thoughtfully over several years to avoid harming businesses and consumers.
The steel industry is facing similar challenges. The U.S. imports about a quarter of its steel, and prices for domestic steel products have jumped nearly 40% since last Thursday. Analysts fear that higher prices and potential supply shortages could negatively impact economic growth and lead to a trade war.
Canada, a major supplier of aluminum and steel to the U.S., expressed readiness to compete but cautioned about the repercussions. “Remembering how disruptive a 10% tariff was for the U.S. aluminum industry, I can only begin to imagine how destructive a 25% tariff will be for the U.S. economy,” said Jean Simard, CEO of the Aluminum Association of Canada.
The uncertainty surrounding these tariffs has also affected global metal prices, with fears that an escalating trade war could slow down economic growth worldwide.
