US President Donald Trump threatened tariffs on imports from Canada, China, Mexico and the European Union this week. Tariffs to Canada and Mexico were announced on 1 February 2025 and then paused for a month to allow for negotiations. Ones to China have been implemented. Tariffs to the European Union have been proposed but nothing has happened yet. What does this mean for the cement sector?
Graph 1: Imports of cement and clinker to the US. Source: USGS. Estimated data for 2024.
The data suggests that whacking 25% tariffs on cement imports from Canada and Mexico would have an impact. The US imported 26.5Mt of cement and clinker in 2023. Based on United States Geological Survey (USGS) data from January to October 2024, imports in 2024 have fallen by 8% year-on-year but they still represent a large chunk of consumption. Türkiye has been the biggest source of imports over the last five years but Canada has been the second biggest supplier. Together with Mexico, it provided over a quarter of imports in 2023. A similar share is expected in 2024. Greece, a country in the EU, has also been present in the top five importing countries to the US during this time.
The Portland Cement Association (PCA) reinforced this view. In a carefully worded statement it took pains to point out alignment with the intentions behind the tariffs, such as appreciating that the administration was open to negotiation and appeared to be flexible. However, it warned that the moves could adversely affect energy and national security, delay infrastructure projects and raise costs. It pointed out the import share from Canada and Mexico, adding that this represented nearly 7% of the US’ cement consumption. It noted which states were the main entry points for cement imports from the two countries. Finally, it highlighted the high level of consumption (36%) that imports from Canada might account for in northern states such as New York, Washington and so on. Meanwhile, Mexico’s National Chamber of Cement (CANACEM) warned that the proposed actions might trigger a ‘competitiveness crisis’ in the US.
Holcim’s CEO, by contrast, nonchalantly told Reuters that he didn’t expect any impact by tariffs on his business. Miljan Gutovic described the group’s US operations as a local business with production happening in the country and equipment and spare parts all being sourced locally. This optimistic view is likely to be influenced by the company’s impending spin-off of its US business. The listing in the US remains scheduled for the first half of 2025 with no complications expected from tariffs.
Clearly, implementing tariffs on imports of cement and clinker from Canada and Mexico could cause a shortage in the US in the short term. This, in turn, could lead to higher prices for consumers in the US. This potential effect would be pronounced in border regions that are reliant on imports. It is worth noting that a number of production lines in both Mexico and Canada have previously been mobilised to meet the export market to the US. These lines would likely be mothballed if tariffs were to be implemented, unless they could find other markets. In the medium term though, as the World Cement Association (WCA) pointed out this week, the world produces too much cement. So it looks likely that the US cement market would adjust to a new equilibrium. Taxing imports from the EU would have a similar effect. Although it seems like it would be less pronounced for the US cement market unless it was in conjunction with tariffs to Canada and Mexico. It would certainly be bad news for cement producers in Greece.
Cement producers in the US look set to benefit from tariffs as demand for their products and prices could increase. There is a risk that too sudden a change to the import market could cause adverse market effects through shortages. Many of these companies are multinational groups with headquarters in foreign countries. However, the strength of the US market compared to elsewhere has prompted some of these businesses to become more ‘American’ through listing in the US or focusing merger and acquisition activity in North America.
At this point we’re stuck in a half-way house place where import tariffs have been threatened and negotiations are pending. The relatively muted stock market reaction to the tariffs and Trump’s swiftness in enacting pauses suggest that it is brinkmanship by the US administration. If this situation continues for any length of time then it will likely have an effect all of its own. In which case don’t expect any export-focused investment by cement companies in Canada and Mexico any time soon.
