The U.S. government's decision to impose a 25% tariff on imports from Canada and Mexico—effective February 1, 2025—is expected to have significant implications for the metals market. Analysts at Morgan Stanley (NYSE: MS) highlight that the U.S. relies heavily on Canada and Mexico for key metal supplies, including copper, aluminum, steel, and zinc.
The U.S. imported 565,000 tons of refined copper in 2023, covering 36% of domestic demand.
Canada and Mexico accounted for 36% of total copper imports.
The tariffs could increase the premium on COMEX copper, already 6% higher than the London Metal Exchange (LME).
COMEX copper inventories have hit their highest levels since 2018.
Potential supply shifts may occur, but short-term domestic price increases are likely.
Historical S&P 500 Constituents API can be used to track copper-dependent industries within the index and analyze historical trends.
The U.S. imported 4.5 million tons of aluminum in 2023, covering 82% of refined demand.
Canada and Mexico supplied nearly 60% of these imports, with Canada alone accounting for 64% of unwrought aluminum.
The Midwest premium (surcharge for physical delivery) has risen to 26.75 cents per pound ($590 per ton)—the highest level in a year.
U.S. buyers may need to seek alternative suppliers, while Canada and Mexico could redirect shipments to other markets.
Commodities API can provide real-time aluminum pricing and trends impacted by these tariffs.
The U.S. imported 677,000 tons of refined zinc in 2023, covering 67% of domestic demand.
Canada alone supplied half of total U.S. zinc imports.
While zinc has not been the primary focus, tariffs could drive up the Midwest zinc premium.
The U.S. had 15.7 million tons of net steel imports in 2023, covering 17% of domestic demand.
Between 40-50% of imports came from Canada and Mexico.
The long-term impact on steel prices may be muted, as the U.S. has been expanding its steelmaking capacity, adding 10.7 million tons between 2020 and 2023.
An additional 10.5 million tons of steel capacity is expected between late 2024 and 2027.
Higher input costs for industries reliant on these metals (automotive, construction, aerospace).
Increased domestic production potential benefiting U.S.-based metal producers.
Market shifts as Canada and Mexico redirect exports.
Investors tracking commodity markets can leverage the Commodities API for real-time price changes and the Historical S&P 500 Constituents API to analyze past performance of impacted sectors.
The 25% tariff on Canadian and Mexican metals is set to create immediate disruptions, particularly for copper, aluminum, and zinc. While steel's impact may be tempered, short-term price spikes are expected across various metals. Investors should monitor pricing trends, supply chain shifts, and domestic production adjustments to navigate the changing landscape effectively.
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