Considering a 50% tariff on iron and aluminum, the "tariff-driven price increase" risk for basic metals such as copper, nickel, and platinum group metals is underestimated

Trump plans to significantly raise the steel and aluminum tariffs to 50% starting June 4, which may just be an appetizer for Trump's metal trade war.

According to news from the Chasing Wind Trading Desk, Citibank pointed out in a research report released on June 2 that as the U.S. continues its investigation into copper and other key minerals under Section 232, tariffs as high as 50% are likely to spread to copper, platinum group metals, and other base metal sectors in the coming months.

Citibank stated that this would pose risks to domestic metal consumers in the U.S., as higher tariffs would inevitably lead to rising metal prices, thereby increasing procurement costs for U.S. metal consumers. However, this also provides arbitrage opportunities for investors, as metal prices in the U.S. market may be higher than in other global markets, whether in exchange pricing or physical premiums.

Due to the many uncertainties surrounding the implementation of U.S. tariffs, Citibank holds a cautious outlook on the price trends of base metals outside the U.S. before June, but by the third quarter of 2025, as tariff policies become clearer and demand slows, base metal prices may decline by 10% in the next 0-3 months.

Broader metal tariffs may be implemented in the third quarter of this year

Trump's tariff policy previously faced legal obstacles. [According to CCTV News](https://mbd.baidu.com/newspage/data/landingsuper?id=1833409661645291211&wfr=&third=baijiahao&baijiahao_id=1833409661645291211&c_source=kunlun&c_score=0.999000&p_tk=7934fz1rSzgU2C3dV7c0NwHt%2FXMsascVu937ct%2FJS0O0PaM0b6%2BUaGv%2BPqUSeiTVDqfh2kZ8iVoeA4XNza44n6wnAG%2FNkxhWjzxLgX5z9NE7brid06uRQRotMBTG16P3U%2FkKrASPv%2Frv8XGVpOx0xaDKuH3eA7Hg%2Fu5bKSUl5kdWcQ8%3D&p_timestamp=1748475974&p_sign=aceb45f952756b076e29c20c187db154&p_signature=145f4b889c698fd56622c521aa7ba1f8&__pc2ps_ab=7934fz1rSzgU2C3dV7c0NwHt%2FXMsascVu937ct%2FJS0O0PaM0b6%2BUaGv%2BPqUSeiTVDqfh2kZ8iVoeA4XNza44n6wnAG%2FNkxhWjzxLgX5z9NE7brid06uRQRotMBTG16P3U%2FkKrASPv%2Frv8XGVpOx0xaDKuH3eA7Hg%2Fu5bKSUl5kdWcQ8%3D|1748475974|145f4b889c698fd56622c521aa7ba1f8|aceb45f952756b076e29c20c1 On May 28, local time, a U.S. federal court blocked the tariff policy announced by President Trump on April 2, ruling that Trump had overstepped his authority.

Citigroup pointed out that these legal obstacles make the U.S. government more urgent in implementing trade policies and more aggressively use Section 232. Even if the court maintains its original ruling, the U.S. government will certainly seek other means to impose tariffs, such as invoking other legal provisions like Sections 232, 301, and 122.

From the timeline of government-related research report submissions, this urgency can be felt:

Taking copper materials as an example, the deadline for the final report is November 25, while the critical minerals report adopts an accelerated 180-day timeframe, to be submitted no later than October 19. Notably, a mid-term report on critical minerals will be released on July 14, which may narrow the range of metals involved.

Citigroup believes that, given the current situation, these studies are being expedited, and tariffs may be implemented in the third quarter of 2025.

Base metal prices may come under pressure in Q3 this year, with copper being particularly evident

Due to the uncertainty surrounding the implementation of U.S. tariffs, Citigroup analysts hold a cautious outlook on base metal price trends before June, but expect that as U.S. tariff policies become clearer and global demand weakens, base metal prices will continue to be under pressure in the third quarter of 2025, especially copper.

Citigroup noted that copper is particularly susceptible to impact because investors' net long positions are high, meaning most investors are betting on rising copper prices. On the other hand, the front-loading effect of Section 232 has led to significant early purchases of copper. Once the tariff policy is confirmed, the demand from front-loading will gradually diminish, which may lead to a decline in copper demand and put pressure on copper prices.

Citigroup stated that in addition to the impact of tariffs on metal prices, two key areas may also constrain the growth of metal demand:

First, a decline in solar installation capacity. According to Citigroup's utility team forecasts, China's solar installation capacity is expected to decrease by 39% to 44% in the second half of 2025, which directly affects copper demand. Solar power generation requires a large amount of copper (for wires, transformers, etc.), and a reduction in installation capacity will lead to a decline in copper demand.

Second, the electric vehicle (EV) industry faces obstacles. Previously, on May 22, media reports indicated that the U.S. might introduce policies to suppress electric vehicle sales (such as reducing subsidies and imposing tariffs on imported vehicles). Moreover, tariffs on imported electric vehicles also put pressure on electric vehicle production outside the U.S.

Additionally, Citigroup mentioned that many automakers are currently shifting their battery technology development direction, vigorously building lithium iron phosphate (LFP) battery factories while reducing the production of ternary lithium batteries (NMC, which require metals like nickel and cobalt), greatly limiting the growth of demand for nickel-cobalt-manganese (NMC) and casting a shadow over the nickel market outlook