Investing.com -- The U.S. government's decision to impose a 25% tariff on imports from Canada and Mexico, set to take effect on February 1, is expected to cause immediate disruptions in the metals market.

Analysts at Morgan Stanley (NYSE: MS ) note that the U.S. is a net importer of key metals, including copper , aluminum , steel, and zinc , with dependence on Canada and Mexico for supply.

The move is likely to push domestic prices higher in the short term as markets adjust to the new trade barriers.

Copper is among the metals that will see immediate effects. In 2023, the U.S. had net imports of 565,000 tons of refined copper, representing 36% of domestic demand.

Canada and Mexico accounted for 36% of total copper imports, or 31% when excluding scrap. The tariffs could further widen the premium on COMEX copper, which is already trading around 6% higher than the London Metal Exchange.

While this could attract additional supply from other regions, the time required for trade flows to shift means higher domestic prices are expected in the near term. Inventories on COMEX have already climbed to their highest levels since 2018.

Aluminum will likely see an even greater impact. The U.S. imported about 4.5 million tons of aluminum in 2023, covering 82% of refined demand.

Canada and Mexico supplied nearly 60% of these imports, with Canada alone accounting for 64% of unwrought aluminum.

While COMEX aluminum can be delivered outside the U.S., the primary effect of tariffs is expected to be felt in the Midwest premium—the surcharge buyers pay for physical delivery.

That premium has already climbed to 26.75 cents per pound (around $590 per ton), the highest level in a year, and could rise further if supply disruptions persist. The U.S. is expected to look for alternative sources of aluminum, while Canada and Mexico may need to redirect shipments to other markets.

Zinc , another metal with heavy U.S. reliance on Canadian and Mexican imports, may also see price increases. The U.S. imported 677,000 tons of refined zinc in 2023, covering 67% of domestic demand.

Canada alone supplied half of those imports. While zinc has received less attention compared to copper and aluminum, analysts at Morgan Stanley suggest that market adjustments could drive up the Midwest zinc premium once the implications of the tariffs become clearer.

Steel, which accounted for 15.7 million tons of net imports in 2023, representing 17% of U.S. demand, is another key material that will be affected.

Between 40-50% of these imports came from Canada and Mexico, depending on whether scrap metal is included in the calculation.

However, analysts point out that the impact on steel prices may be limited in the long term. The U.S. has been increasing its steelmaking capacity, with about 10.7 million tons of new production coming online between 2020 and 2023, and an additional 10.5 million tons expected between late 2024 and 2027.

U.S. mills have been operating at around 70-75% utilization, indicating that there is already some excess capacity that could absorb lost imports.

While price spikes and supply shifts are expected in the short term, markets will eventually adjust. Trade routes may be reconfigured, with alternative suppliers stepping in to meet U.S. demand.

For now, though, the tariffs are set to drive up costs, particularly for copper, aluminum, and zinc, as industries scramble to secure supply amid shifting trade dynamics.