Aohui official website: Trump tariffs push up US metal prices, domestic production increases are difficult to make up for the demand gap

US industrial metals prices have been pushed up by President Donald Trump's 25 per cent tariffs on steel and aluminium, underlining the reality that domestic production will struggle to quickly fill the gap in demand.AohuiAUSFOREXofficial websiteThe analysis said that it will take time to reopen closed factories and build new facilities, leading to short-term supply constraints. At the same time, market fears that the trade war could weigh on economic growth have also affected global metal prices.

1. Soaring aluminum prices: Insufficient domestic production capacity

Aluminium is one of the metals most affected by Mr. Trump's tariffs. Net imports of US aluminium account for about 82 per cent of US demand, according to Morgan Stanley. Since Mr. Trump announced the tariffs, US aluminium prices have surged 60 per cent over London Metal Exchange futures to 35 cents a pound. "Aluminium capacity will have to expand significantly in a short period of time to replace some imports with domestic production," said Volkmar Baur, analyst at Commerzbank.

However, US aluminium production has fallen sharply in recent years. US Geological Survey data shows that US aluminium production in 2023 is only 670,000 tons, well below the 3.70 million tons in 2000, while demand is 4.30 million tons. Morgan Stanley's Amy Gower said that while about 470,000 tons of spare capacity could theoretically be restarted, it would take at least 6-12 months and longer for new smelters.

2. Steel prices skyrocket: supply constraints intensify

The steel industry has also been hit by the tariff policy. The US imports about a quarter of its total steel, while domestic hot-rolled coil prices have surged nearly 40% since last Thursday. "The bigger impact could be the negative impact on economic growth from the escalation of the trade war," notes UBS analyst Andrew Jones. The United Steelworkers union (USW), while supporting efforts to curb global overcapacity, also called on Trump to work with Canada to avoid further escalation of trade frictions.

3. Copper price volatility: Tariff expectations affect the market

Although Mr. Trump has yet to impose tariffs on copper, his threats last week have pushed the premium for US Comex copper over London Metal Exchange copper to a record high. The copper premium fell back to $725 a tonne on Tuesday from $930 a tonne, but it is still double the level at the end of January. Price volatility has been exacerbated by expectations that copper could be the next tariff target.

4. Global metal prices fall: trade war fears

Global industrial metal prices generally retreated on Tuesday, reflecting concerns that the trade war could lead to slower economic growth and lower metal demand. Canadian aluminum producers warned that tariffs could lead to higher prices and hurt U.S. consumers, as similar policies during Trump's first term showed.

summary

Trump's tariff policy has pushed up the price of steel and aluminum in the United States, but domestic production cannot quickly make up for the demand gap, resulting in short-term supply constraints. Soaring aluminum and steel prices highlight the problem of insufficient capacity in the US metals industry, while fluctuations in copper prices reflect market concerns about tariff policies. At the same time, the pullback in global metals prices indicates that the trade war may have a negative impact on economic growth and metal demand. In the future, the trend of the US metals market will depend on the recovery speed of domestic production capacity and the further evolution of trade policy.