The ongoing geopolitical issue between the United States and its allies with Russia over Ukraine has caused uncertainty in the global aluminium sector. The Russian aluminium industry is vital to the country's defence industrial base, and while economic sanctions have been imposed on Russia, none have targeted the aluminium sector until now. In 2018, sanctions were placed on the Russian aluminium giant, Rusal, causing the aluminium market to be shocked and prices to soar.
Aluminium traders were concerned about what would happen in 2023, but in late February, the White House announced that the United States would impose 200 per cent tariffs on Russian aluminium, including imports from other countries. The tariffs were part of a wider package of trade enforcement actions against Russian metals, minerals, and chemicals totalling around $2.8 billion.
Despite concerns that the tariffs would cause prices to increase, some commodity experts predict that the impact will be insignificant due to several circumstances. The tariffs are not as harsh as other measures that were considered, such as a total prohibition on Russian aluminium imports and renewed sanctions against Rusal. Additionally, the United States relies less on Russian aluminium than it did in 2017, with market share decreasing to around 4 per cent last year.
More significant macroeconomic and demand-side concerns have affected aluminium prices than the US tariffs on Russian aluminium imports. The LME metal price has declined by about 30 per cent from a year ago, despite continued pressure.