US metal buyers are likely to shift their focus to the Middle East and Chile as the Trump administration’s tariffs on Canadian and Mexican imports take effect. The new levies, set to kick in on Tuesday, have sent shockwaves through the markets, with aluminum producers in Canada such as Alcoa and Rio Tinto being heavily impacted.
According to industry sources, US companies are looking for alternative suppliers to circumvent the tariffs, which will see 25% levies imposed on imports from Mexico and most goods from Canada. The United Arab Emirates and Bahrain are expected to be major beneficiaries of this shift, as they are both significant aluminum producers.
The tariffs also have implications for copper and silver imports, with Peru and Chile seen as potential alternative suppliers. Combined, Canada and Mexico represent around half of US domestic silver consumption and 10% of US copper consumption.
Analysts predict that the redirection of trade flows could soften the impact of the tariffs, with greater US imports from these alternative sources. However, they also warn that further tariff measures are likely, which would raise the stakes for US companies looking to navigate the new landscape.
As one lawyer noted, clients should be cautious in case the tariffs were withdrawn and prepare to sell into markets beyond the US, in case Trump expands tariffs to other jurisdictions.
Source: https://www.reuters.com/markets/commodities/us-metal-buyers-likely-turn-mideast-chile-tariffs-bite-2025-02-03