In May 2019, President Trump amended the import duties on steel and aluminum from three exporting countries: Mexico, Canada and Turkey. The amendment eliminated the 25% steel import duty and the 10% aluminum import duty on products originating from Canada and Mexico, which were first imposed in spring 2018 when the president put into action the much-talked-about Section 232 tariffs on steel and aluminum, regardless of origin. Just prior to the announcement concerning Mexico and Canada, the president issued a proclamation reducing the higher tariff of 50% on steel imports from Turkey to 25%, which is in line with most other countries.

Canada and Mexico account for approximately 30% of all steel imported into the United States, suggesting the elimination of the 25% tariff on steel imports from those countries will have a meaningful effect on steel prices. Since the announcement, hot-rolled coil prices fell 11.2% from $651 per mt to $578 per mt between May 1, 2019, and June 4, 2019, confirming the removal’s impact. As of June 2019, the price of steel was down nearly 20% since the beginning of the year and was below the pre-232 tariff price level.

Aluminum prices were steady since the elimination of the 10% tariff on products originating from Canada and Mexico, having fallen only 1.9% between May 1, 2019 and June 4, 2019. From the beginning of 2019 to June, aluminum prices were flat, down just 0.9%.

What is not contemplated above and could further complicate the price of both commodities is the usage of tariffs by President Trump to negotiate a deal with Mexico concerning immigration policy. In June 2019, the president revoked a proposal that would have resulted in a 5% tariff on all goods imported from Mexico into the U.S. The proposal included monthly 5% increases until the tariff reached 25%. Although the proposal was revoked prior to being enforced, further tariffs, whether industry- or country-specific, remain an ongoing threat to the predictability of global commodity prices.