Industrial metals had a volatile start to 2025 thanks to Trump’s tariff policies. In early February, the US president imposed 25% tariffs on all US imports of steel and aluminium, effective March 12.
The impact will be greater for aluminium than steel because the US imports significant volumes of aluminium. Tariffs would boost aluminium prices, representing a significant upside risk to the US Midwest premium forwards. By contrast, the effects on LME prices will be minimal.
The US imports roughly half of its aluminium. Canada is the biggest supplier, accounting for 58% of imports, followed by 6% from the United Arab Emirates. Imported steel accounts for roughly a quarter of US consumption needs, with Canada the top supplier at 25%, followed by Brazil and the EU at 17% apiece and Mexico at 14%.
Trump claims the duties will increase domestic production and bring jobs back to the US. However, previous tariffs didn’t increase domestic production of either metal. In 2024, the US steel industry’s output was 1% lower than in 2017 before Trump’s first round of tariffs. The aluminium industry produced almost 10% less.
Copper imports are also at risk as Trump orders an investigation on national security grounds. This paves the way for tariffs down the road. As a result, Comex copper futures have surged.
Tariffs are bearish for industrial metals as global growth slows. Yet the prospect of a prolonged trade war raises expectations that Beijing may unveil more aggressive stimulus measures, limiting the downside for metal prices.
Concerns that tariffs might intensify inflation risks as economic growth slows are boosting demand for safe-haven assets like gold. Gold prices are already up more than 12% year-to-date, establishing a series of consecutive record highs along the way. With tariff concerns likely to linger, gold will continue to benefit from heightened uncertainty.
Meanwhile, central banks will continue to buy gold as geopolitical tensions and a difficult economic environment increase demand for safe-haven assets. The People’s Bank of China (PBoC) increased gold reserves for a third consecutive month.
Trump’s return is triggering something of a gold rush in the US, too. Though Trump hasn’t specifically targeted gold with levies, traders worry the precious metal could be hit by any potential blanket tariffs. This US demand surge could provide a further boost for gold prices. We believe gold will hit more record highs this year, with $3,000/z now in sight.