U.S. Tariffs on Steel and Aluminum to Disrupt Global Markets, Says Fitch

Fitch Ratings warns that new U.S. tariffs on steel and aluminum imports, introduced following Donald Trump’s reelection, will increase commodity market volatility and create regional price disparities.

Effective March 12, the U.S. will reinstate a full 25% tariff on steel and raise aluminum import tariffs to 25% from 10%, eliminating previous exemptions and quotas. Additionally, Washington has announced broad 25% tariffs on most imports from Mexico and Canada, a 10% tariff on Canadian energy resources, and a 10% tariff on China.

Aluminum Market to Take the Hardest Hit

The U.S. aluminum industry is particularly vulnerable, as it relies on imports for 85% of its consumption, with Canada supplying 70% of those imports. The tariffs are expected to drive up U.S. aluminum prices and increase the Midwest premium, raising costs for automakers and beverage manufacturers.

While Canada may shift exports to Europe in response, Fitch does not foresee a major global supply disruption unless the tariffs persist long-term.

Steel Industry Faces Regional Price Fluctuations

Although the U.S. is a net steel importer, with 18% of its demand met by imports, new domestic capacity is slowly ramping up. The largest suppliers—Canada, Mexico, and South Korea—will be impacted, but U.S. steelmakers stand to benefit from higher domestic prices.

Chinese steel exports to the U.S. are unlikely to be significantly affected, as they account for less than 1% of China’s total steel exports.

Long-Term Economic Uncertainty

The tariffs' impact will depend on exemptions and their duration, but Fitch warns that prolonged implementation could pressure industries reliant on steel and aluminum, while further straining trade relations with key partners.