Impact of Tariffs and Macroeconomic Factors on US Non-Ferrous Metal Prices: An Empirical Analysis

Abstract

This paper analyses the factors that determine the prices of the non-ferrous metal in the US, specifically the role of tariffs and important macroeconomic variables. The analysis uses US data, explanatory variables as ferrous metal imports, GDP, exchange rates and tariff rates. A multiple linear regression model is used, and relevant variables are transformed by the use of logarithmic transformation to enhance the model interpretability and model fit. The results indicate that import demand has a strong and statistically strong positive impact on metal prices, but GDP has a positive but insignificant impact relationship. Conversely, tariff rates are statistically non-significant implying that there is only a minimal direct influence on the price movements of metals. Diagnostic tests ensure that there is no heteroskedasticity and autocorrelation, even though signs of possible model misspecification are found. Overall, the findings emphasize the predominance of market fundamentals in price determination of metals over trade policy, making valuable contributions to policymakers and researchers.