New duties on steel and aluminium

Donald Trump announced on Monday 10 February 2025 another series of tariffs, this time on aluminium and steel. The new regulations increase the current tariffs to 25%, covering imports from all countries, not just neighbouring Canada and Mexico. At the same time, the exemptions that were originally granted by the Biden administration are being lifted. In Trump's words, no exemptions will be granted either. It is questionable how the situation will really turn out by the beginning of March, when the tariffs are due to come into force. Indeed, after the latest postponement of the tariffs and Trump's further statements about considering an exemption for Australia, there could be the possibility of negotiating exemptions for other countries as well. In the case of Australia, Trump has referred to the trade deficit vis-à-vis the US. One of the current administration's top trade advisers, Peter Navarro, was quoted by The Guardian as saying that, in addition to national security and supporting domestic industry, the move is also an effort by the US to reduce its dependence on foreign partners. On the other hand, there is a warning finger about a deepening trade war that ultimately raises prices for consumers. In addition, stricter rules are being introduced that mandate the processing of both metals on US territory, which is intended to prevent China and Russia from circumventing the tariffs.[1]

Will history repeat itself?

Trump is not stopping at steel and aluminium and has hinted at further tariffs on other key goods such as cars, semiconductors and medicines. He has also announced the introduction of reciprocal tariffs against countries that choose to raise tariffs on US exports. The latest measures come as part of a broader push for protectionist policies, including 10% on Chinese imports and the postponed 25% tariffs on Canada and Mexico from early February. Meanwhile, a similar scenario occurred during the first term, when tariffs of 10% on aluminium and 25% on steel were imposed. These, according to the CBC, resulted in a drop of almost half in imports of both metals from Canada.[2] 

The response didn't wait long

The new tariffs were met with strong resistance from US trading partners. The premier of the Canadian province of Ontario, Doug Ford, accused Trump of creating unnecessary chaos[3], while the prime minister, Justin Trudeau, branded the tariffs unacceptable and said action would be decisive if necessary.[4] Canada is the largest supplier of both aluminum and steel to the U.S., with 6 million tonnes of steel and 3.2 million tonnes of aluminum shipped last year, according to U.S. Commerce Department data.[5] The tariffs were also described as unjustified by the European Commission in its official statement, but the Commission will not take action for the time being as it has no official opinion.[6]  South Korea is planning meetings with the US Government, with Japan and with the EU.[7] Meanwhile, Indian Prime Minister Narendra Modi is reportedly considering lowering tariffs on some US exports to ease tensions.[8] India is often criticised by Trump, accusing the country of maintaining high tariffs on US goods.

Steelmakers in the US in profits

The announcement of new tariffs on steel and aluminium imports sparked an immediate reaction in world markets. US steel and aluminium manufacturers, which could benefit from the measures, saw significant gains. These are currently stagnating as the US market is overwhelmed by cheaper imports from abroad. Companies such as Cleveland-Cliffs, for example, rose nearly 18% on February 10, 2025, while Century Aluminum rose more than 10%.* Experts caution, however, that such gains may be temporary, as previous tariff increases led to an initial surge that later fizzled out, according to Reuters.[9] Some non-US firms, such as Austria's Voestalpine and Germany's Thyssenkrupp, have reacted negatively. Companies in Asia were similarly affected. Indian steelmaker Tata Steel fell 3% on the NSE India and extended losses on the next trading day, 11 February 2025.*

Cleveland-Cliffs' stock price performance over the past 5 years. (Source: Investing.com)*

Century Aluminum's share price performance over the last 5 years. (Source: Investing.com)*

Tata Steel's share price performance over the last 5 years. (Source: Investing.com)*

Aluminum and steel fell, gold rose

The aluminium market reacted negatively, falling by more than 1% to USD 2 637 per metric tonne on the London Metal Exchange on 11 February 2025.* On the day of the announcement, however, it traded relatively steadily, with its value reaching multi-week highs. Steel rebar futures contracts fell to one-month lows at just over CNY 3,200 (USD 438) per tonne.* Gold, on the other hand, once again benefited as a safe haven. The spot price of the yellow metal rose to an all-time high of USD 2,939 on 11 February 2025, while futures contracts for delivery in April 2025 rose to USD 2,965. Both fell during the day.*

Aluminium price development over the last 5 years. (Source: Investing.com)*

Steel rebar futures price development over the last 5 years (in CNY). (Source:Tradingeconomics.com)*

Gold futures contract price development for April 2025 delivery over the last 5 years. (Source:Investing.com)*

Spot gold price development over the last 5 years. (Source: Investing.com)*

Conclusion

The imposition of new tariffs on steel and aluminum is further evidence that the United States is continuing protectionist policies under Trump's leadership. Although domestic producers may benefit in the short term, higher raw material prices may negatively impact U.S. processors and consumers. Foreign partners are already signalling possible retaliatory measures that could deepen trade conflicts. .[1]On the other hand, there is still room for negotiation and the possibility that some countries will negotiate exemptions. However, the question remains whether the Trump administration will be willing to make concessions.[1]

* Past performance is no guarantee of future results.

[1] Forward-looking statements are based on assumptions and current expectations, which may be inaccurate, or on the current economic environment, which may change. Such statements are not guarantees of future performance. They involve risks and other uncertainties that are difficult to predict. Results may differ materially from those expressed or implied by any forward-looking statements.

[1] https://www.theguardian.com/us-news/2025/feb/10/trump-steel-aluminum-tariffs

[2] https://www.cbc.ca/news/business/steel-aluminum-industry-reaction-1.7455286

[3] https://www.bbc.com/news/articles/c98yv3e1yyqo

[4] https://www.investing.com/news/commodities-news/canada-will-respond-to-unacceptable-us-tariffs-strongly-and-firmly-if-needed-trudeau-says-3860755

[5] https://www.bbc.com/news/articles/c98yv3e1yyqo

[6] https://ec.europa.eu/commission/presscorner/detail/en/statement_25_456

[7] https://www.investing.com/news/stock-market-news/south-korea-trade-minister-says-trump-steel-tariffs-to-hit-companies-profits-3860608

[8] https://www.investing.com/news/stock-market-news/indias-aluminium-exports-to-the-us-likely-to-drop-due-to-tariffs-industry-says-3858997

[9] https://www.investing.com/news/stock-market-news/german-steelmakers-tumble-as-trump-threatens-tariffs-3858184