Constellium CEO on Trump's Tariffs: Impact on Global Aluminum Trade

Impact of Increased Tariffs on Aluminum

• 📈 A 25% to 50% jump in tariffs is viewed as potentially detrimental, turning a positive for the aluminum industry into a negative.
• ⚠️ The original 25% tariff was beneficial for creating a level playing field with China, but a rise to 50% poses risks.
• 📉 Risks include a reduction in demand due to higher product prices and potential shifts in supply, such as Canada selling aluminum elsewhere to avoid hefty tariffs.

Global Operations and Customer Impact

• 🌍 Constellium operates on a "local for local" model, with significant operations in both the US and Europe, limiting cross-continental trade flows.
• 💰 The primary impact of higher tariffs is an increase in prices for customers, which can become a hurdle beyond ensuring a level playing field.
• ✈️ Key customers include major companies like Airbus, General Motors, Jaguar, Land Rover, and Stellantis.

Targeted vs. Blanket Tariffs

• 🎯 While targeted tariffs could be more palatable, there's a risk of circumvention, with metal finding its way through other routes, as seen with imports from Vietnam or Mexico.
• 🧱 A blanket approach, though blunt, has shown some benefits, but going too high can be problematic.

Business Prudence Amid Uncertainty

• 🛒 Some clients attempted to pre-order in Q1 to get ahead of tariffs, but these were small volumes and did not change long-term fundamentals.
• 📊 Amid significant uncertainty, Constellium is adopting a more prudent approach to its business operations.

Fundamental Strength of Aluminum

• 🌱 Despite market uncertainties, aluminum remains a growing market due to its lightweight, recyclable properties.
• 🚗 Key growth areas include automotive, aerospace, and packaging, where aluminum increasingly replaces plastics.