Tariffs can encourage companies to invest in domestic production and create jobs. At the same time, they can also spark trade wars, leading to job losses in affected industries. Their economic impact is certainly complicated. At present, the U.S. is in a major tariff conflict with Canada, Mexico, and China after President Trump raised tariffs significantly.
He imposed a 25% duty on imports from Mexico and Canada and doubled tariffs on Chinese goods to 20%. This led to new trade disputes with important partners. Industry experts say these tariffs could affect $2.2 trillion in annual trade, impacting many industries.
But Trump firmly believes these tariffs aim to reduce the trade deficit. By making imported goods costlier, they are pushing Americans to buy local products.
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As per nbcnews, in 2024, Mexico, China, and Canada account for 42% of U.S. imports, making them key players in any trade conflict.
How Canada, China, and Mexico Fired Back
Canada reacted quickly. Prime Minister Justin Trudeau announced 25% tariffs on $20.7 billion worth of U.S. goods. He plans to expand these tariffs if the current ones remain. This mainly affects energy and minerals.
Similarly, China responded with 15% tariffs on some U.S. farm products like cotton, wheat, corn, and chicken. They added a 10% tariff on other goods, including dairy, fruits, vegetables, pork, beef, and soybeans. These tariffs will start on March 10. As per credible news sources, China’s commerce ministry also limited exports to 15 U.S. companies and added 10 U.S. firms to its “unreliable entity list.”
These trade barriers follow a pattern from earlier administrations. Last year, the White House decided to raise tariffs on Chinese semiconductors to 50%, while duties on Chinese electric vehicles quadrupled to over 100%. A new set of 25% tariffs on aluminum and steel will take effect soon, escalating tensions further.
Mexico’s President Claudia Sheinbaum stated the country has backup plans to handle U.S. tariffs.
U.S. Dependence on Imported Critical Minerals
A report from the Center for Strategic and International Studies highlights the U.S.’s reliance on imports for critical minerals. The U.S. relies entirely on imports for 12 of the 50 identified critical minerals and for over 50% of another 29.
Consequently, tariffs on Canada, Mexico, and China could raise costs for the U.S. These nations supplied 41% of U.S. metal and mineral imports in 2023. China leads the global production of 29 critical minerals and controls processing for rare earths, graphite, lithium, cobalt, and copper and is a major supplier for the U.S.
Doug Ford Warns of Nickel Cutoff Over U.S. Tariffs
Ontario Premier Doug Ford ripped off Trump’s exorbitant tariff rates on Canada. He threatened to halt nickel and electricity exports to the U.S. in response to the 25% tariffs on Canadian goods set to take effect tomorrow.
In an interview with NBC News NOW on Monday, Ford called the tariffs an “absolute disaster” for both nations, warning they would create “massive problems” for residents on both sides of the border.
Ford said,
“We will respond strongly and we don’t want to. “On the critical minerals I will stop shipments going into the U.S. for nickel. I will shut down manufacturing because 50 per cent of the nickel you use is coming from Ontario.”
He further opined,
”You need our uranium, you need our potash, you need our high-grade nickel. I will stockpile our high-grade nickel, that 50 percent of your military and manufacture needs. Your aluminum, your steel, your lumber. It will be an absolute disaster and this is all due to one person. That is President Trump.”
- READ MORE: Trump’s Tactic to Make America Great Again: Expanding Domestic Oil, Gas, and Critical Minerals
U.S. Aluminum Imports and Tariffs: Impact on Costs and Supply Chains
Domestic production of aluminum is just one third of its needs. According to Statista, the United States imported about 4.8 million metric tons of aluminum for consumption in 2024.
Mexico and Canada supply around 90% of U.S. aluminum scrap imports. The U.S. heavily relies on aluminum and steel imports, with Canada providing 58% of aluminum and 23% of steel imports.
Meanwhile, the apparent consumption of aluminum totaled about 4.3 million metric tons. Canada is a top aluminum supplier to the U.S., sending most of its primary aluminum for use in American manufacturing.
Imports of aluminum for consumption in the United States from 2010 to 2024 (in 1,000 metric tons)
Disrupting these supply chains will raise costs for industries such as automotive manufacturing. In this industry, parts often cross borders several times before the final assembly.
Tariff History Repeats Itself
The U.S. aluminum sector has faced trade measures before. In 2018, then-President Donald Trump imposed a 10% tariff on imported aluminum and 25% on steel to boost domestic production. These tariffs later extended to the EU, Canada, and Mexico.
In August 2024, under President Joe Biden, aluminum tariffs rose to 25%, increasing the U.S. Midwest premium by over 30%. Trump’s potential re-election could lead to further tariff hikes, creating market uncertainty.
Increased Aluminum Prices
The U.S. Midwest premium, a key indicator of aluminum tariff risk, has risen since Trump’s election win. S&P Global revealed the current price (as of February 25, 2024) for the US Aluminum P1020 Midwest Transaction Premium is 41.75 cents per pound.
Midwest Transaction Premium (MWP) Price History
The U.S. and Canada both want to secure critical mineral supply chains, even with trade tensions. This is because collaborating in mineral exploration, processing, and production boosts long-term stability and economic security.
However, building new domestic processing facilities and securing alternative mineral sources will take years. Thus, short-term reliance on Canadian and Mexican metals is unavoidable.
Winners and Losers: The Effects of New Tariffs on U.S. Industries
The latest tariffs will have mixed effects across industries. Some domestic producers will benefit from less foreign competition, while others will face rising production costs. Goldman Sachs has recently rolled out an evaluation report that highlights the potential winners and losers of Trump tariffs.
Winners: Industries producing aluminum, steel, and oil and gas extraction will likely benefit the most. Higher tariffs on imports in these sectors will protect domestic producers. As these industries compete with imports, new tariffs will make foreign goods pricier, boosting demand for U.S.-made products.
Losers: The biggest losers will be secondary steel and aluminum producers and petroleum product manufacturers. These sectors rely heavily on imported raw materials. Higher tariffs on steel, aluminum, and oil will significantly raise their production costs. Midstream manufacturers of products like auto parts, beverage cans, and window frames will also feel the pressure.
Tariffs on Canadian and Chinese aluminum could disrupt global supply chains, raising costs for U.S. manufacturers. Supply shortages may arise as producers redirect exports to other markets. The long-term fix is to boost North American supply chains. We need to invest in local processing. Also, the U.S. and Canada must work together for steady access to key materials.
Can the U.S. Really Be Self-Reliant with Trump’s Tariffs?
Trade tensions are shaking up industries and slowing investments. Tariffs on key imports like steel, semiconductors, oil, gas, and medicine could hurt U.S. businesses more than those on Chinese goods.
Many American companies rely on these imports to stay competitive. If tariffs keep changing, businesses may hold back on investing due to rising costs and supply issues.
Industry experts speculate higher tariffs on critical imports could do more damage than those targeting China. The last trade war (2018-2019) showed how foreign retaliation can hit U.S. exports hard. More significantly the U.S. National security could also at risk—China has already cut off supplies of key minerals like gallium and germanium, which are essential for defense.
However, a possible solution lies in stronger U.S.-Canada ties with favourable tariffs. A stable North American supply chain for critical minerals can reduce reliance on foreign sources and protect both the economy and national security.
- FURTHER READING: Trump’s Tariffs and Climate Rollbacks: How 2025 is Shaking Copper Markets and Clean Energy Goals
The post Trump’s Tariffs on Canada, China, and Mexico: A Risky Bet for U.S. Critical Minerals and Aluminum? appeared first on Carbon Credits.
Most businesses that decide to act on their net-zero targets reach the same point of friction. Buying carbon credits has meant tracking down brokers, sitting through sales calls, and requesting a quote just to learn a price, sometimes with limited proof of what you are buying.
The earnings calls that quietly reframed climate from sustainability question to operating risk.
Three earnings calls in the last 18 months tell the story without any help from a press release.
Hershey, May 2024: cocoa price exposure compresses margin, and the company attributes part of the cost shock to West African weather. Olam, July 2024: coffee climate exposure quantified in the annual report. JBS, January 2025: supply chain climate disclosures expanded materially in response to investor pressure and regulatory expectation. None of these companies issued the announcement as climate news. They issued it as financial news. The climate-linked supply chain risk did not arrive with a sustainability framing; it arrived as a P&L line.
You are probably reading this article because you suspect the same thing is happening to your business. This piece walks through what is showing up on which earnings calls, how procurement and finance leaders are quantifying the exposure, and what serious corporates are doing about it before the regulator asks.
Where climate risk has already appeared in earnings
The pattern is consistent across resource-intensive sectors. A weather event compresses supply, the price spikes, the cost flows through the income statement, and the analyst on the call asks whether the event is anomalous or structural. Increasingly, the honest answer is the second one.
Cocoa is the cleanest example. The 2023 to 2024 West African harvest fell sharply on the back of erratic rainfall and disease. Cocoa futures more than tripled. Companies with concentrated West African sourcing absorbed the cost; companies with diversified sourcing absorbed less. The exposure was not climate as ESG topic. It was climate as cost of goods.
Coffee follows the same pattern. Brazilian and Vietnamese harvests have moved on weather more sharply across the last several seasons. Roasters with long-tenor supplier relationships and origin diversification have managed the volatility; roasters with spot-market exposure have not. Wheat, sugar, palm oil, beef: the same dynamic in different commodities, a pattern the IPCC AR6 Working Group II report projects will intensify across agricultural systems through mid-century.
What this means: climate risk is no longer a footnote in the 10-K. It is a line item the CFO has to explain on the call.
The three commodity exposures that hit margin first
For most companies with material Scope 3 exposure, three exposures dominate the near-term P&L risk.
- Concentrated single-origin sourcing in a climate-vulnerable region. If your tier-one supply for any material commodity sits in one geography, you have a concentration risk that climate amplifies. Diversification across origins is the obvious hedge, but it takes years to build and requires relationships you cannot acquire by tender.
- Supplier financial fragility under climate stress. Smallholder farmers, who supply a large share of the global cocoa, coffee, and palm oil market, do not carry the balance sheets to absorb yield shocks. When yields collapse, they exit. When they exit, your supply base shrinks, and the surviving suppliers raise prices. The risk is structural, not cyclical.
- Logistics and storage exposure to extreme weather. Hurricane disruptions to Gulf shipping, drought-driven Panama Canal restrictions, flooding in European inland waterways: each of these has moved input costs in the last three years, a pattern documented in Munich Re’s natural catastrophe data. The exposure shows up as a one-quarter event in the financial press but accumulates over time on the cost line.
TCFD and ISSB disclosure changes
The disclosure architecture has now caught up with the risk. The Task Force on Climate-related Financial Disclosures, whose recommendations are now embedded in the ISSB’s IFRS S2 climate standard, requires companies to disclose climate-related risks across physical and transition categories, with quantification where possible.
For physical risk specifically (the climate-linked supply chain risk you are reading about), the disclosure must address both acute exposures (extreme weather events) and chronic exposures (gradual changes in temperature, precipitation, and growing seasons). The disclosure must address the time horizon over which the risk is material, the parts of the value chain exposed, and the financial impact under different scenarios.
The CSRD imposes similar requirements under European law, with double materiality (both financial and impact materiality) embedded in the assessment. The practical effect: your auditors and your investor relations team now need a defensible answer to the climate-linked supply chain risk question, and the answer needs to be quantified.
What procurement and finance can do now
Three actions matter near-term.
Map your exposure. Most companies do not have a clear view of which tier-one and tier-two suppliers sit in which climate-vulnerable geographies. Without the map, you cannot quantify the risk, and without the quantification, you cannot disclose it credibly. The map is the foundation, and World Resources Institute climate risk research provides useful public tooling to start.
Diversify and deepen, in that order. Diversification across origins reduces concentration risk, but the deeper move is to invest in the resilience of the suppliers you already have. Regenerative practices, agroforestry, soil health interventions: these reduce yield volatility under climate stress and protect your input cost trajectory.
Embed the climate spend inside procurement, not outside it. Treating climate risk as a sustainability cost line subordinates it to the ESG budget. Treating it as a procurement and resilience investment puts it in the budget that matters, which is the cost-of-goods budget that the CFO defends quarterly.
Nature-based supply chain investments are the asset class designed for exactly this purpose. They sit inside the value chain, they reduce climate-linked supply risk, they generate verifiable Scope 3 reductions, and they produce the documentation an auditor and a regulator can both test.
If you are quantifying climate-linked supply chain risk in advance of the next earnings cycle or the next disclosure period, the carbon and sustainability experts at Carbon Credit Capital can help you map your exposure and structure a Dual-Value Model response that addresses reduction, resilience, and disclosure-readiness in a single program. Schedule a consultation.
More and more small and medium-sized businesses are hearing the same question from their larger customers: What is your carbon footprint? That question now travels down entire supply chains, and it arrives next to tender requirements, certification criteria, and rising customer expectations.
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