Trump's tariff resurgence: Steel and aluminum prices to spike
The decision by the President of the United States, Donald Trump, to impose tariffs on steel and aluminum is expected to cause an increase in prices for these raw materials in the U.S., according to Goldman Sachs, one of the world's largest investment banks. These tariffs will apply to imports from the European Union and other regions.
On Monday, U.S. President Donald Trump signed a memorandum imposing a 25% tariff on steel and aluminum imports. This document brings back the 2018 tariffs and raises the aluminum rate from 10% to 25%. This decision will impact Canada, Mexico, Brazil, the European Union, Japan, and the United Kingdom, among others.
Goldman Sachs predicts that the new tariffs will have a significant impact on steel prices in the United States. "Goldman Sachs Group Inc. said Trump's plan to impose 25% tariffs on steel and aluminum imports will largely be passed through to US prices, if no major trading partners are exempted," reports Bloomberg.
It was noted that the United States imports 85% of its primary aluminum, primarily from Canada. In addition to Canada, Mexico is a key export market for U.S.-produced steel, which results in net trade between these countries and the U.S. being nearly balanced, Goldman Sachs emphasizes.
The future of tariffs on other raw materials
The investment bank highlights the potential for imposing tariffs on other raw materials, such as copper.
Markets are pricing in over a 90% probability of a 10% import tariff on copper by March 2025, the bank reports. The baseline forecast includes a 70% probability of such a tariff being implemented by the end of 2025.
The new tariffs on steel and aluminum are set to take effect on March 12th at 12:00 a.m. Eastern Time. President Trump also announced further tariffs aiming to equalize the rates imposed on U.S. products by other countries. There are plans for tariffs on imported semiconductors, pharmaceuticals, and automobiles.
