85% probability of 10% tariff on Canadian aluminium and other imports: Analysts

Commodity markets are factoring in heightened chances that US President Donald Trump’s sanctions on Canadian imports will include raw materials such as oil, according to Goldman Sachs Group Inc., which cautioned that petrol prices in the Midwest could rise if the penalties affect crude flows.

Differences in regional pricing for commodities such as aluminium and crude copper indicate an 85 per cent probability of a 10 per cent tariff being imposed, analysts including Samantha Dart and Daan Struyven said in a note. Lower probabilities were associated with higher eventual tariffs, they added. Canada is by some margin the largest supplier of primary metal to the United States, accounting for 79 per cent of total imports in the first 11 months of 2024. On the other hand, the re-elected President threatened Mexico with tariff imposition, which is a major supplier of aluminium scrap and aluminium alloy to the USA. This could further complicate the commodity markets.

“Canadian oil tariffs would risk unpopular if temporary gasoline price increases in the US Midwest,” the analysts said.

Raw materials markets, spanning energy to metals, are bracing for widespread disruption as Trump seeks to reshape global trade. The US administration has proposed various strategies, including tariffs on imports from its closest neighbours, potential restrictions on China, and sector-specific levies on commodities. However, the gravity of the situation is accentuated by the discussions that have even included the possibility of a universal tariff.

According to investing.com, Aluminium prices fell by 0.68 per cent to settle INR 247.35 (approximately $3.00) as investors awaited the US Federal Reserve’s policy meeting for guidance interest rates. Market sentiment fluctuated after former US President Donald Trump hinted at possible trade measures against Colombia, reviving tariff concerns. The Fed is expected to keep rates steady in its upcoming meeting, with potential rate cuts anticipated by June, according to the CME Group’s FedWatch Tool. On the international front, the European Union is set to impose sanctions on Russian primary aluminium imports, aiming to consolidate restrictions on metal from Russia following its invasion of Ukraine. Global aluminium production rose 3 per cent year-on-year in December to 6.236 million tonnes, according to the International Aluminium Institute (IAI).