Commodities Flash

• President Trump plans to impose 25% tariffs on all US imports of steel and aluminium from all countries – no tariff start date has been set as of writing.
• The US imports ~25% of its steel supply and ~80% this is currently tariff-free under agreements with Canada, Mexico, EU, Japan, South Korea, Brazil and others. A +25% tariff would add ~USD150/MT to the import cost in our view, taking steel (hot-rolled coil, HRC) import parity with the EU to ~USD800-900/MT vs current price of ~USD755/MT.
• Meanwhile, in aluminium, the US imports ~70% of its supply, with ~60% of this tariff free from Canada. We view that a +25% tariff would increase the Midwest Premium to ~USD40-45c/lb vs current ~USD30c/lb (excluding transportation and other factors).
• Overall, whilst our base case for the commodities complex outlined in our 2025 outlook (see here) suggests only modest spot price upside to commodities index investing, today’s unusually wide range of potential policy adjustments strengthens the diversifying role commodities play in portfolio allocation 2025