Is the US considering lowering steel and aluminum tariffs? What does this mean for metals

Recently, market rumors suggest that the United States is considering reducing tariffs on some steel and aluminum products. In response, Morgan Stanley stated that even if tariff adjustments do occur, their impact would be very limited.

On February 14, according to Xinhua News Agency, multiple U.S. media outlets reported that the Trump administration is considering cutting tariffs on certain steel and aluminum products to ease American public concerns over rising prices and to pave the way for the upcoming midterm elections.

Also on February 14, according to ChaseTrade, Morgan Stanley’s latest research report states that policy adjustments will only target the metal content in derivative products, while primary metals will still face a high 50% tariff. The key point of this rumor is that: LME aluminum prices and U.S. Midwest premiums are not expected to be materially affected, and U.S. aluminum producers like Alcoa will continue to be protected in the short term.

The report notes that Morgan Stanley believes in the steel sector, the impact on long steel producers (such as CMC and Gerdau NA) will be less than on flat steel producers (such as STLD, NUE, and CLF). Most importantly, this potential policy adjustment does not imply a reduced likelihood of a 15% tariff on copper.

Evolution of Steel and Aluminum Tariffs: From 25% to 50% Aggressive Path

The report states that the U.S. steel and aluminum tariff policy has undergone rapid escalation.

In early 2025, the U.S. imposed a 25% tariff on steel, aluminum, and their derivative products. By June, this rate doubled to 50%.
In August, the government further added about 400 customs codes to the tariff list, expanding tariffs to many finished products—aluminum or steel contained in these goods would face a 50% tariff, while the rest would be taxed at the same rate as the country of origin.

It is noteworthy that U.S. companies have actively lobbied to include more products in the tariff list. Media reports indicate that mattress, cake mold, and bicycle manufacturers have applied for additional tariffs on related products. Morgan Stanley notes that this mechanism has led to an expanding list of affected goods, increasing customs clearance complexity and corporate costs.

According to the report, the rumored policy adjustment seems aimed at narrowing the list of products affected by tariffs, with a focus on consumer affordability. However, Morgan Stanley emphasizes that this does not mean a change in the 50% baseline tariff on primary metals—this rate is expected to remain unchanged.

This policy design could have unintended consequences: imported metals face a 50% tariff, while foreign-made finished goods might only face lower equivalent tariffs. Such a tariff disparity could weaken the competitiveness of certain domestically manufactured goods in the U.S., contrary to the original intent of trade protection.

Impact on Aluminum Market: Supply and Demand Basically Unchanged

The U.S. aluminum market’s heavy reliance on imports is key to understanding the potential impact of this policy. About 80% of domestic aluminum demand in the U.S. depends on imports, with 3.1 million tons of primary metals and products like sheets and foils imported from January to November 2025.

Morgan Stanley believes that even if tariffs on derivative products are reduced, LME aluminum prices will not be affected. In fact, since the tariffs were implemented last March, U.S. imports have weakened, indicating some destocking and demand disruption.

Similarly, U.S. Midwest premiums are unlikely to be directly impacted, as the U.S. will still heavily rely on aluminum imports. Recently, the premium has risen to over $1 per pound (over $2,200 per ton), attempting to attract metal supplies from Canada.

Morgan Stanley states that only if tariffs are reduced on primary metals will the market face downside pressure—and this scenario currently seems unlikely.

The bank also notes that for domestic aluminum producers like Alcoa, tariffs will continue to provide short-term protection. Since LME aluminum prices and Midwest premiums are expected to remain stable, these companies’ profitability will not be directly affected. However, if the tariff adjustment policy is ultimately implemented, the long-term impact on manufacturing needs ongoing monitoring.

In the steel sector, market impacts will show clear structural differentiation. Long steel producers such as CMC and Gerdau NA are expected to be less affected because construction-related long steel products involve less imported derivative steel.

In contrast, flat steel producers like STLD, NUE, and CLF face greater risks. Flat steel is widely used in consumer goods manufacturing, which is likely to be a core area affected by this tariff adjustment. However, Morgan Stanley expects steel prices to remain high even with a 50% tariff.

It is worth noting that Morgan Stanley states the situation for steel producers is more complex. While a 50% tariff provides price protection for domestic producers, the potential reduction of tariffs on imported consumer goods could weaken downstream demand, a chain reaction that warrants caution.

Copper Tariff Outlook: Is It an Independent Event or a Chain Reaction?

The report highlights that another market focus is whether the tariff adjustment on steel and aluminum signals a potential change in the 15% copper tariff policy. Morgan Stanley gives a negative answer.

Morgan Stanley believes that since this measure only targets derivative products, the primary metal tariffs will remain unchanged, so it has no bearing on the outlook for copper tariffs.

However, the market has already priced in a lower likelihood of copper tariffs. Currently, the COMEX-LME spread for near-month contracts is negative, and the December 2027 COMEX copper price is only 6% higher than LME, significantly below the 15% potential tariff level.

Market expectations are that clear news regarding copper tariffs will emerge around mid-2026.

Risk Warnings and Disclaimers

Market risks exist; investment should be cautious. This article does not constitute personal investment advice and does not consider individual users’ specific investment goals, financial situations, or needs. Users should consider whether any opinions, views, or conclusions herein are suitable for their particular circumstances. Invest at your own risk.