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Global Mechanicals Intelligence

Q2 2025 | APRIL - JUNE

 

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ALERT: Metals Supply Chain Expected to Witness Major Transformation as US Announces 25% Tariff on the Import of Aluminum & Steel

On February 11th, The United States announced a 25% tariff on all steel imports and a 25% tariff on aluminum imports, effective March 12, 2025. This decision expands the existing Section 232 tariffs and revokes previously negotiated country-specific exemptions and quota arrangements. The move is expected to have consequences for global trade, particularly for countries that export significant amounts of steel and aluminum to the U.S.  

The table below illustrates the potential impacts of the tariffs on the countries most impacted.

Country

Metal Exported to the US

Expected Supply Chain Disruptions

Canada

Steel, Aluminium
  • Canada is one of the biggest exporters of Aluminum & steel to the US. According to an article published by CBC, Canada exported  more than $20 billion worth of steel and $15 billion of aluminum to the US in 2023. 
  • Increased costs for US manufacturers will result from reliance on Canadian metal imports.
  • Canada may impose retaliatory tariffs on US goods in response to the US tariffs on metals.
  • The integrated North American supply chains, especially in the automotive and construction sectors, will likely experience disruptions.

Mexico

Steel
  • Mexico will likely experience similar impacts to Canada, though existing trade agreements may lessen the severity.
  • US manufacturers in sectors such as automotive and manufacturing will face increased costs.

Brazil

Steel
  • The new tariffs will reduce the competitiveness of Brazilian steel in the US market.
  • Brazil may shift its steel exports to other regions due to the tariffs.
  • US businesses that rely on Brazilian steel will face increased costs.

United Arab Emirates

Aluminium
  • US manufacturers relying on aluminum imported from the UAE will experience increased costs.
  • The UAE's aluminum supply chains to the US, particularly for specific grades or alloys, may face disruptions.

 

Steel and aluminum are essential to various U.S. industries, playing a critical role in manufacturing everything from vehicles and infrastructure to consumer goods and advanced technologies, with their availability and cost directly affecting competitiveness.

Here are some of the key sectors that are expected to be affected:

  • Automotive: The automotive industry is a major consumer of steel and aluminum. Increased costs for these raw materials could lead to higher vehicle prices, potentially impacting sales and profitability.  
  • Construction: The construction sector relies heavily on steel for buildings, bridges, and other infrastructure projects. Higher steel prices might lead to project delays or cancellations.  
  • Manufacturing: A wide range of manufacturing industries, from appliances to machinery, use steel and aluminum in their products. These sectors could face increased production costs.
  • Aerospace: The aerospace industry utilizes specialized aluminum alloys in aircraft manufacturing. Tariffs could raise the costs of these materials, affecting the price of aircraft manufacturing and maintenance.  
  • Packaging: Aluminium is widely used in packaging, particularly for food and beverages. Increased aluminum prices may lead to higher packaging costs.

The US tariffs on steel and aluminum imports are poised to disrupt global trade and significantly impact key US industries. Major exporters like Canada, Mexico, Brazil, and the UAE face potential repercussions, including reduced competitiveness and supply chain disruptions. Domestically, US manufacturers across sectors like automotive, construction, manufacturing, aerospace, and packaging will likely encounter increased material costs. These tariffs could also trigger retaliatory measures from affected nations, escalating trade tensions and exacerbating the challenge.

Looking ahead, the long-term effects will depend on how these trade dynamics evolve, including potential negotiations, adjustments to the tariffs, and industries' ability to adapt to the changing market landscape.

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