In a report by the bank commenting on the outlook of metals market following Trump's tariffs
The two-tier metal market they are referring to are the US vs the rest of the world, and they also highlighted that the tariffs have politically created friction with key US allies.
They argue that US allies produce many of the value-added steels that the country's current capacity cannot fully replace without substantial increase in investment - and given the high level of policy/demand uncertainty, there is no economic justification for such an investment.
As a result, "the US will end up simply paying the tariffs on the higher-quality imported metal from its allies", the bank argues.
From an economic perspective, the report says that a two-tier market is ultimately damaging to US downstream industries that consume these metals, as it creates an uneven playing field for US industries that will be facing higher metal prices.
The report also notes that industries that are net consumers of steel and aluminium in the US now face cost disadvantages, saying that "a tariff intended to support the US industry may end up boosting margins and investments for a small subset of producers while leaving the broader economy at a disadvantage via higher costs".
The report is a deep dive into the economic consequences of the tariffs implementation, and it's not exactly wrong when you wrap your head around it. The number of consumers and those industries which work with the metals are far greater than those on the production line, so if the larger slice of the pie is the one getting hurt it makes sense to believe that the net effect on the economy is more negative than it is positive.
