Amid various speculations raised by Donald Trump's recently proposed import tariffs on aluminium and copper, the most recent one is the possible impact on domestic consumer good prices. Aluminium industry analysts and participants fear that suggested tariffs on US aluminium and copper imports may affect the availability of the metals in the local markets, resulting in stringent end-use production and, eventually, higher costs.
This notion arrived on Tuesday after Trump expressed his intent to impose tariffs on aluminium, copper, and all other metals needed to produce US military hardware, including steel, in a speech to Republican lawmakers on Monday, January 27. His objective for the proposed tariffs is to encourage the aluminium producers to bring their production to the United States.
Trump firmly said in his speech, "We have to bring production back to our country."
On winning the 2024 US elections, President Donald Trump vowed to reduce product costs smarting from inflation in the first half of his predecessor Joe Biden's term. While some analysts think his plans for import tariffs would strengthen the domestic manufacturing sector, many others argue that these tariffs would weaken his price-cutting pledge.
Anticipating limited trade routes due to upcoming tariffs on Canada, Mexico, and the European Union, many prominent US companies have already planned to reroute their product shipments. For instance, Alcoa's CEO, William Oplinger, suggests that shifting trade flows could be a good tactic to avoid paying tariffs to the US. Hence, the company contemplates redirecting its Australian aluminium output to the United States in response to the proposed tariff on aluminium imports from Canada.
However, an analyst from Sydney investment bank Barrenjoey, Daniel Morgan, pointed out, "There's a few unknowns here. Will these tariffs be enacted, and at what scale, and who will pay? Ultimately, they generally get paid by the consumer, particularly in the case where there's no domestic substitute."
He added that aluminium producers such as Rio Tinto and Alcoa are unlikely to take revenue hits; instead, the tariff costs would have to be borne by end-use manufacturers, who would then pass the burden on to consumers.
B.K. Bhatia, additional secretary general at the Federation of Indian Mineral Industries, said: "If Trump imposes tariffs, it will have an adverse impact, particularly on aluminium because Europe is already on the path to impose a carbon tax, and the UK might do it too."
