How will steel and aluminium prices be affected by the incoming Trump administration?

How will steel and aluminium prices be affected by the incoming Trump administration?

With Donald Trump confirmed as the 47th President of the United States, his stance on tariffs and focus on prioritising American industry could have a significant impact on the global steel and aluminium markets.

Steel and aluminium prices have been volatile recently due to global demand, supply chain disruptions and geopolitical conflicts. Now Trump's election adds another layer to this complex market situation. Not only is he expected to focus less on energy transition, but he is also expected to prioritise the resilience of American industry, which could strongly affect the import and export dynamics of both metals.

Return of tariffs and potential trade policy shifts

Trump's previous administration imposed trade tariffs on steel and aluminium in favour of US industry, leading to higher costs for imported metals. His re-election signals the likelihood of a continuation, or even expansion, of these tariffs. This protectionist stance could once again drive up the price of imported metals, leading to higher costs for industries that rely on these materials.

Higher tariffs could benefit US steel and aluminium producers by reducing foreign competition and potentially stabilising domestic production levels. However, industries that rely on affordable raw materials, such as construction and automobiles, could face higher costs, which could affect their profitability.

US steel and aluminium prices could rise due to complicated US-China trade relations

When discussing the possibility of tariffs under Trump, the focus quickly turns to the already very complex relationship between the US and China. This is crucial, given that China is currently the world's largest producer of steel and aluminium.

US-China relations are expected to remain or become even more complex for Trump's next term in office as well, with a focus on reducing dependence on Chinese imports and strengthening American supply chains. Trump's tough stance on China has already led to a number of tariffs on Chinese goods, including steel and aluminium. A continuation of this approach could lead to restrictions on steel and aluminium imports from China, with potential price increases for both metals in the US due to limited availability.

What does the next US administration mean for the global steel and aluminium markets?

If Donald Trump follows through on his announcement to raise tariffs on foreign imports, his presidency is likely to not only shake up the US domestic market, but also cause global price volatility. The potential deterioration in export opportunities to the US as a result of a possible increase in export tariffs could mean that China, in particular, will have to look for new markets.

Given the slowdown in the Chinese economy, its own market is unlikely to be able to absorb all the products. China will therefore most likely try to sell the goods produced with the existing overcapacity in Europe, possibly with the support of government subsidies. This could lead to an oversupply of steel and aluminium in Europe, which would tend to lower prices. However, local market conditions, transport costs and possible European protective measures (e.g. anti-dumping duties) could mitigate the effect. Steel and aluminium prices in Europe could therefore be expected to fall in the short term, but the exact development will depend on political and economic responses.