Goldman Sachs Cuts Aluminum Price Forecast by 13% Due to Trump Tariffs

Goldman Sachs has revised its aluminum price forecast for the next two years, citing the impact of tariffs imposed by U.S. President Trump on the economic outlook for the United States. The investment bank now expects aluminum prices to rebound to $2,300 per metric ton by December 2025, down from a previous forecast of $2,650 per metric ton. This adjustment comes as the London Metal Exchange (LME) period aluminum CMAL3 traded at approximately $2,392 per metric ton on Monday.

The revision in the aluminum price forecast is directly linked to the economic implications of Trump's tariff policies. The U.S. president has announced plans to reveal the tariff rates on imported semiconductors this week, a move that is expected to further strain global trade relations and economic growth. Goldman Sachs attributes the downward revision in aluminum prices to a decrease in global demand, which is anticipated to result in a surplus of 580,000 metric tons in the global aluminum market by 2025. This is a significant shift from the previous forecast, which predicted a shortage of 76,000 metric tons.

Goldman Sachs has also adjusted its predictions for global aluminum demand growth. The bank now expects demand to increase by 1.1% in 2025 and 2.3% in 2026, down from previous estimates of 2.6% and 2.4% respectively. This downward revision is due to the anticipated slowdown in global GDP growth, which is expected to negatively impact aluminum demand. Despite this, Goldman Sachs still predicts that aluminum prices will rise after 2025, although the increase will be more modest than previously thought. The bank expects aluminum prices to reach $2,720 per metric ton by December 2026 and an average of $2,800 per metric ton in 2027, with a market deficit of 722,000 metric tons.

The economic impact of Trump's tariffs extends beyond aluminum prices. Economists have warned that the tariffs will lead to increased prices for imported goods, which will in turn drive up inflation. This inflationary pressure is expected to persist throughout the remainder of the year as the tariffs continue to affect businesses and consumers. The tariffs are also expected to have a negative impact on employment in the manufacturing sector, as the increased costs of imported materials and components will make it more difficult for companies to maintain their current levels of production and employment.

The tariffs imposed by the Trump administration are part of a broader strategy aimed at boosting U.S. manufacturing and reducing the country's reliance on foreign imports. However, the economic consequences of these policies are complex and far-reaching. While the tariffs may lead to short-term gains for certain sectors of the U.S. economy, the long-term effects on global trade and economic growth are likely to be negative. The downward revision in aluminum prices by Goldman Sachs is just one example of the broader economic impact of Trump's tariff policies. As the global economy continues to grapple with the effects of these policies, it remains to be seen how the situation will evolve in the coming months and years.