US Companies Shifting Metal Sourcing?

Due to newly imposed tariffs by President Donald Trump, U.S. companies are expected to change their sourcing strategies for metals. On Tuesday, additional levies will come into effect, introducing a 25% tariff on imports from Mexico and Canada and a 10% tariff on imports from China. This shift in trade policy is having a notable impact on market dynamics and forcing companies to explore alternative markets.

As a response to these tariffs, U.S. buyers are anticipated to look towards the Middle East and India for aluminum and towards Chile and Peru for copper. In 2023, the U.S. imported 5.46 million metric tons of aluminum products, with Canada being a significant supplier, accounting for 3.08 million tons of the total imports. With the new tariffs, this supply network is set to undergo significant changes.

The imposition of these tariffs has already caused a noticeable 17% increase in the U.S. Midwest premium as of late, reaching 28 cents per pound or $617 per metric ton.

Aluminum company Alcoa (NYSE: AA) might redirect Canadian aluminum shipments to Europe, consequently raising the volume of metal imports from the Middle East and potentially India into the U.S. market.

Beyond aluminum, Citi analysts have pointed out that the redirection in trade flows could partially offset the tariffs' effects. It is anticipated that metals like copper, silver, and gold might see increased imports from countries such as Peru, Chile, and Switzerland. Presently, Canada and Mexico constitute approximately half of the U.S.'s silver consumption and 10% of its copper consumption, according to available data.