President Trump today signed an executive order imposing a 25% tariff on all imported steel and aluminum, with no exceptions or exemptions. Trump imposed a 25 percent tariff on steel and a 10 percent tariff on aluminum entering the United States during his first term, but has since granted duty-free quotas to several trading partners, including Canada, Mexico, the European Union and the United Kingdom. Compared with the 2018 period, the tariff policy on aluminum imports is more aggressive, and there is less room for negotiation. According to relevant White House officials, the 25% steel and aluminum tariffs will take effect on March 4 (note: according to the latest news from foreign media, the measures will take effect on March 12).
Impact:
At this stage in Trump's second term, the core purpose of his tariff policy for the steel and aluminum industry is to use tariffs to stimulate more enterprises to open in the United States, which is conducive to boosting local industries and accelerating the development of manufacturing. However, the completion of the purpose of Trump's policy has yet to be verified, historical experience shows that Trump's steel and aluminum tariff policy in 18 years has not brought about the revival of the manufacturing industry, but has also been affected by countermeasures and the uncertainty of tariff policy, which has brought a blow to the industry and consumers. The United States is very dependent on imports to meet the domestic demand for aluminum, relevant data show that the United States in 2023 net imports of aluminum accounted for about 44% of the total demand, and most of the imports from Canada, Mexico and other countries. Due to limited domestic aluminum production capacity in the United States, which can only meet part of domestic demand, import restrictions may lead to a widening gap between supply and demand in the short term. In the long run, the uncertainty of the policy impact is high, which may have a certain negative impact on the industry and the economy, and the macro price of aluminum will partly fall.
For China, since the first round of tariff policy in 18 years, the direct export of aluminum to the United States has gradually decreased. By calculation, in 24 years, China's direct exports of aluminum to the United States accounted for about 4% of the total exports, accounting for a relatively small proportion. China's export is more scattered, the largest exporter Mexico only accounts for about 9% of the total export volume. Most of the consumption is concentrated in the country, the basic level of domestic electrolytic aluminum after the upstream part of the operating rate is still low, downstream inventory accumulation, is also in the start stage, at this stage is still in the weak stage of supply and demand, waiting for repair. In terms of the impact of this round of tariff policy, the direct impact may be relatively weak, and it may be more indirectly influenced by external disks. In the medium and long term, some of China's aluminum products are re-exported to the United States through Mexico and Canada, and Trump's aluminum import tariffs on all countries may affect China's export re-export trade to other countries, which will have some adverse effects on China's exports.
In general, Trump's tariff policy may restrict imports in the short term and stimulate the rise of international aluminum prices, and it remains to be seen in the long term. For Shanghai Aluminum, the sensitivity after the impact of the first round of tariffs is weakened, and the impact of this tariff policy is less than that of external disks. Before the official landing of tariffs in March, Chinese enterprises may have some "grab exports" behavior, promoting a substantial increase in exports. After the short-term stimulus, the mood of the market is expected to gradually fall back, and eventually may return to the impact of domestic fundamentals, and the future needs to pay attention to China's export situation.
