The U.S. government's decision to impose a 25% tariff on imports from Canada and Mexico—effective February 1, 2025—is expected to have significant implications for the metals market. Analysts at Morgan Stanley (NYSE: MS) highlight that the U.S. relies heavily on Canada and Mexico for key metal supplies, including copper, aluminum, steel, and zinc.

Key Market Disruptions and Price Adjustments

Copper

• The U.S. imported 565,000 tons of refined copper in 2023, covering 36% of domestic demand.

• Canada and Mexico accounted for 36% of total copper imports.

• The tariffs could increase the premium on COMEX copper, already 6% higher than the London Metal Exchange (LME).

• COMEX copper inventories have hit their highest levels since 2018.

• Potential supply shifts may occur, but short-term domestic price increases are likely.

Historical S&P 500 Constituents API can be used to track copper-dependent industries within the index and analyze historical trends.

Aluminum

• The U.S. imported 4.5 million tons of aluminum in 2023, covering 82% of refined demand.

• Canada and Mexico supplied nearly 60% of these imports, with Canada alone accounting for 64% of unwrought aluminum.

• The Midwest premium (surcharge for physical delivery) has risen to 26.75 cents per pound ($590 per ton)—the highest level in a year.

• U.S. buyers may need to seek alternative suppliers, while Canada and Mexico could redirect shipments to other markets.

Commodities API can provide real-time aluminum pricing and trends impacted by these tariffs.

Zinc

• The U.S. imported 677,000 tons of refined zinc in 2023, covering 67% of domestic demand.

• Canada alone supplied half of total U.S. zinc imports.

• While zinc has not been the primary focus, tariffs could drive up the Midwest zinc premium.

Steel

• The U.S. had 15.7 million tons of net steel imports in 2023, covering 17% of domestic demand.

• Between 40-50% of imports came from Canada and Mexico.

• The long-term impact on steel prices may be muted, as the U.S. has been expanding its steelmaking capacity, adding 10.7 million tons between 2020 and 2023.

• An additional 10.5 million tons of steel capacity is expected between late 2024 and 2027.

Investor Implications

• Higher input costs for industries reliant on these metals (automotive, construction, aerospace).

• Increased domestic production potential benefiting U.S.-based metal producers.

• Market shifts as Canada and Mexico redirect exports.

Monitoring the Market

Investors tracking commodity markets can leverage the Commodities API for real-time price changes and the Historical S&P 500 Constituents API to analyze past performance of impacted sectors.

Conclusion

The 25% tariff on Canadian and Mexican metals is set to create immediate disruptions, particularly for copper, aluminum, and zinc. While steel's impact may be tempered, short-term price spikes are expected across various metals. Investors should monitor pricing trends, supply chain shifts, and domestic production adjustments to navigate the changing landscape effectively.