US tariffs on aluminum: risks and impact on European foundries

A sort of trade truce appears to have been reached between the European Union and the United States with new US tariffs on aluminum and most European goods imports, set at 15%. However, aluminum and steel, and likely copper as well, are penalized by a 50% tariff.

According to recent simulations by Oxford Economics, maintaining this scenario could have very serious economic consequences for the EU, with estimated overall annual losses of close to €70 billion, a significant contraction in exports, and a structural weakening of competitiveness.

The consequences of the escalating tariffs on die-cast exports to the US

The scenario becomes even more worrying if the conflict escalates, with even higher tariffs and potential reciprocal retaliatory measures. The costs, in this case, could reach up to €210 billion per year for the EU.

Complicating the situation is the fact that this is not just an issue between Brussels and Washington, as trade tensions between the two blocs could generate collateral damage with other trading partners.

Domino Effects on International Balances

The report cites relations with Switzerland and India, for example. Some critical scenarios include:

• Swiss Scenario: If the United States imposed a tariff of around 40% on Swiss goods, the impact would be enormous for a country whose exports to the US account for nearly 7% of GDP. The repercussions would not be limited to Bern, but would also affect the EU, particularly Germany, which is highly integrated with the Swiss economy.
• Chinese Variable: If Washington raised tariffs against Beijing to the proposed levels of 125%-145%, part of Chinese exports could flow into the European market, resulting in a massive influx of traditionally low-priced products that would lead to significant distortions of competitiveness and unsustainable pressure on European producers.

These are, of course, working hypotheses that consider the highest level of risk. However, tariff balances are a highly critical and complex issue, and the long-term negative structural implications remain enormous.

The Impact of Tariffs on Foundries: A Historic Break

The reality is that the traditional model that governed relations between the European and US economies for decades no longer exists. Today, we face an uncertain future, without consolidated shared rules or mutual trust, and with a framework of stable trade relations that must be rebuilt from scratch.

The new American tariff strategy actually represents a true historic break from decades of progressive liberalization of world trade. Since 1947, with the GATT agreement, international trade policies had followed a more or less calm path, oriented toward reducing barriers, even though globalization had recently shown some signs of slowing.

But the Trump presidency has chosen a radical change of direction. The situation has now changed completely, and we are experiencing a climate of uncertainty that has already produced significant negative repercussions in the immediate future.

Metallurgical Sectors Under Pressure

There is no time to waste, especially considering the base metals sector such as steel, aluminum, and likely copper, currently subject to an import tariff generally fixed at 50%. Discussions remain open, with the possibility of agreed quotas, but negative repercussions for the EU aluminum market, such as those affecting scrap, are already being felt. The impact of the duties on foundries and on die-casting exports to the US is particularly critical for companies in the sector.

Urgent Strategies for European Competitiveness

The EU and governments urgently need corrective strategies on multiple fronts:

• Raw materials: avoid excessive dependence on imports with supply bottlenecks and carbon-intensive raw materials, which could compromise supply security and circular economy objectives;
• Energy: reduce costs and ensure stable supplies to maintain industrial competitiveness;
• Single Market: strengthen and stimulate domestic growth;
• Productivity and Innovation: focus on competitiveness, energy, and environmental sustainability.

European decision-makers have long had the guidelines to follow to save the European economy, with all the elements clearly addressed in the Letta and Draghi reports, which indicated how to invest one trillion euros a year in the EU and lay the foundations for preventing it from becoming a colony of the United States and China.

Today, however, we are faced with the imposition of a request to invest $1.35 trillion in the United States, all at the expense of our industrialization.

Source: A&L Aluminium Alloys Pressure Diecasting Foundry Techniques