Price spikes, demand fears haunt metal markets as Trump’s 25% tariffs bite

REACTION in the metals markets to US President Donald Trump’s new 25 per cent tariffs on steel and aluminium imports may be muted so far, but it belies the underlying tension. With markets on edge and price spikes almost certain, experts warn that the real concern is the potential demand destruction.

“The market has reacted with caution. We’re expecting it to be more impactful on premiums rather than price. The long term implications are unknown with potential for demand destruction,” said Marex’s senior metals market maker Tommy Bain.

He is referring to the fact that while the tariffs may not immediately affect the base price of metals, they could impact premiums – the extra cost above the base price that traders pay for specific types of metals, which can be influenced by factors like supply disruptions.

“Markets are attempting to digest the implications…pretty much everyone is in the dark given critical details have yet to be furnished,” said Marex senior analyst and president of commodity research group Edward Meir in a note on Tuesday (Feb 11), adding that volatility has been “dramatic” in some markets while rather subdued in others.

US Midwest aluminium premiums showed a muted response on Monday, although more aluminium could potentially be caught up in the tariff dispute compared to copper. In contrast, Chicago-listed copper saw a price jump, rising by US$220 per ton to close at around US$4.70 per pound.