Trump wants to double steel and aluminum tariffs to 50%, U.S. futures prices soar

According to Zhitong Finance APP, after U.S. President Donald Trump announced that tariffs on aluminum and steel would be doubled to 50%, U.S. aluminum and steel futures prices surged. On Monday, aluminum contract prices on the New York Commodity Exchange (Comex) rose by 54%, reaching the highest level since 2013, as aluminum import tariffs will increase to 50% starting this Wednesday. In the U.S. Midwest, aluminum prices for various uses, from beer cans to engine blocks and window frames, are 58 cents per pound higher than the London benchmark contract, equivalent to about $1,280 per ton. This means that U.S. buyers may ultimately have to pay about 50% more than international competitors to obtain this metal. Trump's tariff increase has led to a surge in U.S. aluminum premiums. Trump hopes that raising tariffs will protect the profits of domestic producers and stimulate investment in new capacity. After Trump announced this news last Friday, the stock prices of U.S. steel and aluminum producers soared in after-hours trading. However, construction companies warned that Trump has raised tariffs on steel and aluminum from 10% to 25%, which will increase the costs of key construction materials. Comex steel futures prices rose more than 8% on Monday, before giving back some of the gains. Although the liquidity of these two contracts is relatively low, these trends indicate that the commercial burden brought by tariffs will have the heaviest impact on the U.S. aluminum market. According to Morgan Stanley, over 80% of aluminum in the U.S. is imported, while less than 20% of steel comes from overseas. Citigroup analysts stated, "We expect prices to rise—domestic capacity in the U.S. is also insufficient." Especially for aluminum, the tariffs "so far have mainly been a tax on consumers." In contrast, the benchmark aluminum price on the London Metal Exchange (LME) rose by 0.9%, closing at $2,466 per ton. London copper prices increased by 1.2%, while New York copper prices rose nearly 4%. Analysts indicated that the tariff increase makes it more likely that Trump will continue to implement plans to impose tariffs on copper. Morgan Stanley analysts led by Amy Gower stated, "The market seems to be digesting the increased possibility of imposing tariffs on copper, with New York futures outperforming London futures." These analysts also noted that U.S. buyers have been importing in advance before potential tariffs take effect. "For now, the premium on the New York Commodity Exchange may continue to attract raw materials to the U.S., thereby reducing inventories outside the U.S. and keeping markets outside the U.S. tight."