Navigating the Impact of Aluminum and Steel Tariffs on Businesses Across the Metal Value Chain

In March 2025, President Donald Trump imposed a 25% tariff on all steel and aluminum imports to the United States. These tariffs are having different effects on businesses, with both risks and opportunities depending on the industry.  

For instance, new tariffs announced on Wednesday, April 3, ranging from 10% to 50%, could affect some of America’s largest trading partners. While these latest measures excluded steel and aluminum producers, they contribute to the industry’s complex and uncertain operating environment.  

A closer look at where a company falls in the metal value chain and the nature of its business may offer clearer insight into whether it stands to benefit from the tariffs situation or if it faces the prospect of higher costs.  

President Trump has restored Section 232 tariffs to “protect America’s critical steel and aluminum industries”¹ with levies applying to some of the country’s closest allies, including Mexican and Canadian firms selling metal into the U.S. 

Covering all U.S. imports of steel and aluminum, including finished metal products, from all foreign suppliers, the tariffs are meant to crack down on what the Trump administration officials said were efforts by certain countries to circumvent existing duties. The tariffs could force changes in global supply chains and expedite the need for global metal firms to build, buy and grow in the U.S. market.  

Large associations in the U.S. have supported the tariffs to differing extents. The Steel Manufacturers Association (SMA)² and the Aluminum Association (AA)³ have welcomed the tariffs. And while the Metal Service Center Institute (MSCI)⁴, which represents steel service centers in North America, has not supported tariffs on Canada and Mexico, specifically, the organization does seek free and fair trade for metals; a commonality all three associations agree on.  

The effects of tariffs could depend on where a company lies in the metals value chain and where they operate in the world. We see the impacts of tariffs breaking down as follows. 

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  For metal producers in North America, steel and aluminum prices have been rising for months in anticipation of and after the implementation of tariffs. As a result, metal producers have seen higher prices and increased profitability. In the U.S., elevated prices should continue boosting domestic production, much like the effects observed since the introduction of Section 232 in 2018. 

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  U.S. metal service centers that deal in steel and aluminum, purchasing raw metal from producers and selling it to end customers, are seeing an immediate increase in earnings and improved market positions. Many of these centers have made substantial purchases and are currently receiving additional metal, which should result in strong profits over the next six months.   

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  U.S. metal traders and distributors mostly handle metal on a pre-sold or back-to-back basis, so the impact of imported or traded metal often leads to higher prices being passed on to the U.S. consumer/customer. 

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  U.S. scrap and recyclers in steel and aluminum have seen prices on the rise due to increased demand. In particular, aluminum scrap prices will rise as the shift toward using more secondary aluminum causes imbalances between supply and demand, impacting customers downstream. In fact, for aluminum, the “Midwest premium,” which aluminum producers charge for transportation and storage costs, and also for doing business in the region, has nearly doubled to over 40 cents per pound—near record levels. This surge is expected to lead to higher profits in the coming months.  

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  For metal fabricators or end-market users of metal, the cost of raw metal has risen significantly, and each user must decide how much of the price increases they will absorb versus passing it on to consumers. Many have been hedging their metal purchases, while others have secured long-term contracts (i.e., buying off of an indexed-based metal price), which could gradually reflect price increases for their customers.   

Since the April 3rd tariffs announced by President Trump, metal prices, like most commodity prices, have begun to decline mainly due to demand and recessionary concerns.  

For many parts of the world, including China, Africa, most of South America (excluding Brazil), and many parts of Asia, there will be no change for steel and an increase in the tariff on aluminum from the current 10% to 25%. 

Our view is that the newly imposed metal tariffs on Canada and Mexico will remain in place and will expedite the reworking of the USMCA treaty. 

Of course, countries could impose reciprocal tariffs on various U.S. goods, which could lead to price increases. The question, therefore, becomes: Does this ultimately lead to demand destruction later in the year? The answer may depend on deregulation and tax policies in the U.S. 

In the meantime, broadly applied tariffs will continue to have narrow impacts on U.S.-based metals and manufacturing companies. 

Interested in learning more? Visit our Cross Border Perspectives hub for timely insights about international trade’s impact on economies and markets. 

^{1 Fact Sheet: President Donald J. Trump Restores Section 232 Tariffs – The White House} 

^{2 Steel Manufacturers Association Welcomes the Section 232 Tariff on Imported Steel - Steel Manufacturers Association} 

^{3 U.S. Aluminum Industry Responds to 232 Implementation, Calls for Certainty in Tariff Landscape | The Aluminum Association} 

^{4 MSCI Statement On U.S. Tariffs On Steel And Aluminum Imports – The Metals Service Center Institute}