US metal companies and manufacturers reliant on imported aluminium are likely to shift sourcing to the Middle East and India to circumvent tariffs imposed by President Donald Trump, Reuters reported, citing industry sources.
Trump’s planned tariffs – 25 per cent on imports from Mexico and most Canadian goods, alongside a 10pc duty on Chinese products – lack detailed implementation guidelines but are set to take effect today, unsettling markets.
Aluminium, essential for the transport, packaging, and construction sectors, saw US imports of millions of tonnes in 2023, according to the US Commerce Department.
Analysts say American consumers depend on Canadian producers such as Alcoa and Rio Tinto for over half of their imported aluminium, raising concerns about supply alternatives.
“Canada will divert some aluminium to other markets,” said Glyn Lawcock, an analyst at investment bank Barrenjoey. “For the US to attract aluminium from other regions, it will have to pay a premium.”
These premiums, which cover costs such as handling and shipping, are paid in addition to exchange prices to secure physical metal. US aluminium prices are set by the London Metal Exchange benchmark and the Midwest premium.
Alcoa chief executive William Oplinger said on an earnings call last month that the company could redirect its Canadian supply to Europe. He also predicted that aluminium imports from the Middle East and potentially India would increase. The UAE and Bahrain are key producers in the region.
Two aluminium producers told Reuters they were monitoring Trump’s trade policies, with one stating they had “no intention to change yet.”
A legal adviser, however, urged caution, advising clients to prepare for potential market shifts if Trump extends tariffs to other regions.
Across other metals, alternative trade flows could mitigate the tariffs’ impact, with the US expected to increase imports from Peru and Chile for copper and silver, and Switzerland for gold, Citi analysts wrote in a note.
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