Metals Industry Update Q2 2025

Following a strong start to the year, the U.S. metals market softened in Q2 2025 due to a number of factors. While the first quarter was marked by a rush of pre-tariff buying, Q2 saw a shift as market participants adopted a more measured approach in response to a turbulent trade environment and price volatility. The Supreme Court’s involvement in tariff matters as well as escalating geopolitical tensions further added layers of complexity to the economic landscape.

Though intended to support domestic sourcing, the recent Section 232 U.S. steel and aluminum duty hike to 50% also raises concerns about the economic impact from restrictive trade measures. The levies, which increase input costs for industries including automotive, packaging, and manufacturing, will likely translate to higher consumer prices and a dampening of demand. However, the full inflationary impact of the Trump administration tariffs remains still largely unclear in the fast-changing trade environment.

Against the backdrop of mixed consumer confidence and spending patterns, the Federal Reserve has decided to hold interest rates steady, reflecting caution amid the ambiguous economic outlook. Nonetheless, two quarter-point cuts are still expected this year to stimulate business activity and boost consumption.

M&A activity largely remained muted, constrained by elevated borrowing costs and the challenging economic environment. However, strategic dealmaking is expected to escalate as trade policy stabilizes and borrowing costs decline, particularly for companies that are better shielded from macroeconomic risks and well positioned to benefit from reshoring and tariff-induced domestic demand.

Finally, the signing of significant tax cut legislation, known as “The One Big Beautiful Bill”, has emerged as a pivotal theme to monitor in the metals market.