- Higher tariffs expected to boost US manufacturing, reduce imports
- Trump links move to China deal breach, US Steel-Nippon partnership
US President Donald Trump has announced a sharp hike in tariffs on aluminium and steel imports, doubling them from 25% to 50%, effective 4 June 2025. Speaking at US Steel’s Mon Valley Works in Pennsylvania, Trump cited China’s alleged trade deal violation and framed the move as a step to boost the domestic industry and support a $14 billion US Steel-Nippon Steel partnership.
“This increase will further secure the aluminium and steel industry in the US and protect American workers,” Trump wrote.
Aluminium, essential for industries such as housing, automotive, aerospace, and electronics, is widely used across the US economy. Doubling tariffs to 50% could sharply raise production costs, pushing up consumer prices and straining supply chains. With domestic prices already rising as of March 2025, this move may further escalate costs, especially since the US relies heavily on imports from allies such as Canada and Mexico.
BigMint goes behind the scenes, uncovering what the tariff hike means for India, its steel and aluminium sectors, and the broader economy.
Will doubling of tariffs impact India’s exports?
According to BigMint‘s data, the US imported around 20.06 million tonnes (mnt) of steel in FY’25. A significant portion of these imports – 4.83 mnt – came from Canada, with the country’s shipments to the US accounting for a substantial 95% of its total steel exports. This highlights Canada’s heavy reliance on the US steel market.
In contrast, India’s steel exports to the US in FY’25 amounted to just 0.37 mnt, a mere 3% of its total steel exports. This puts India in a relatively insulated position as far as the potential direct impact of President Trump’s new steel tariffs is concerned.
When it comes to aluminium, the scenario mirrors that of steel. In FY’25, India exported approximately 1.38 mnt of aluminium, which includes both semi-finished and finished products. Of this, only around 0.05 mnt were sent to the US. This makes up a minor fraction of India’s total aluminium exports, reflecting India’s limited exposure to the US market in this sector as well.
Much like steel, Canada is the major supplier of aluminium to the US. In FY’25, Canada exported 3.3 mnt of aluminium to the US, accounting for roughly over 80% of the total 3.9 mnt of aluminium Canada exported globally.
Given India’s minimal exports of both steel and aluminium to the US, the overall impact of the new 25% tariffs on these sectors will likely be negligible.
A market participant noted, “There should not be much impact, as India accounts for only about 3% of the US’s total steel and aluminium imports. We are growing, and domestic consumption is likely to rise further. However, there could be some impact on component and equipment suppliers exporting finished parts to the US.”
Market reactions
Following President Trump’s announcement to double tariffs on steel and aluminium imports to 50%, market participants expressed mixed views on the short-term pricing outlook, particularly for aluminium and related input materials.
On the ground, the impact will hit hard, especially for industries such as construction, automotive, and manufacturing in the US, all of which heavily depend on imported steel and aluminium. If local producers cannot meet demand quickly enough, input costs will rise, which could hurt investment and slow down growth.
For exporters, particularly those dealing in aluminium, this is bad news. Prices into the US will not be as attractive any more. For example, used beverage cans (UBC) were being sold at around 85-87% of London Metal Exchange (LME) prices, but those levels are likely to decline since the US is a major importer of UBC.
Also, while aluminium and steel manufacturers in the US may feel some relief from this policy, downstream industries – such as automotive, construction, and manufacturing – will face challenges. Their raw material costs are likely to rise, which could increase production expenses and contribute to higher inflation in the US economy.
Traders also noted that the full market reaction is still pending, as many global exchanges were closed at the time of the announcement. Aluminium tags are expected to see a slight impact, given that the LME serves as the benchmark for pricing. However, participants are waiting for more clarity on how LME prices will move once the market reopens.
“We will have to watch closely on Monday. Most markets were shut when the news broke, including the LME,” a trader noted. “While US futures showed signs of slowing after the announcement, the real direction will become clearer once global markets reopen.”
He cautioned that Indian manufacturers targeting the US market may face pricing pressure unless production costs are managed carefully.
“The cost of manufacturing needs to be regulated if Indian suppliers want to stay competitive in the US,” he added. “It could be a tough time ahead if no major precautions are taken.”
“Additionally, countries that previously supplied to the US may redirect their material to other markets, potentially affecting pricing for domestic manufacturers in India and other countries.”
As for ferrous metals, the outlook in India appears to be more stable.
“I do not expect the Indian market to fall much in the ferrous segment,” a domestic trader commented. “Local consumption remains strong, and the onset of the monsoon season typically supports consistent demand, which should buffer any external shock.”
Another trader monitoring the developments added that the full impact will likely become clearer in the coming days: “I’m still checking and will have a clearer view next week, as the full market reaction will reflect then. It looks like a sudden jerk to import prices by the US, and this will definitely affect exporters.”
Looking ahead
The aluminium tariff hike reflects Trump’s commitment to reshaping America’s industrial base through aggressive trade policy. However, with global aluminium prices already elevated and uncertainty surrounding international trade relations, the economic and diplomatic fallout remains to be seen.
The move comes amid broader questions about a $14.9 billion partnership between US Steel and Japan’s Nippon Steel and whether such deals, even with tariff protections, will ultimately benefit American workers or increase economic tensions with key allies.
As the US gears up for another contentious election season, the aluminium industry, like steel, may find itself at the heart of both policy debate and political theatre.
Additionally, market participants expect greater clarity on the market’s direction in the coming week. A price hike is expected in aluminium in the short term.
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