Theme of the Day: US aluminium consumers pay the spiralling cost of tariffs

Prices are up over 20% YoY, and US Midwest premiums remain at record levels amid trade uncertainty and tariff discussions. In terms of cost, primary aluminium prices for US consumers have surpassed $5,000/t, factoring in the tariffs, average LME prices and the Duty Paid US Midwest Premium for the year. American aluminium buyers are now paying an eye-watering 68% premium over the LME price to get physical metal. Global inventories are at multi-year lows - total LME inventory, both registered and stored in the off-warrant shadows, closed 2025 at 669kt, down by 331kt on the start of the year. Inventories in the US have plummeted (below 300kt from 750kt the start of 2025). Supply is constrained: China’s production caps, energy-related curtailments elsewhere, and limited greenfield capacity additions are keeping new metal off the market. China’s 45Mt production cap is being enforced, forcing smelters to hold back output in 2026. Disruptions in Iceland, Mozambique, Australia, and elsewhere aren’t helping. Supply-chain friction persists: shipping bottlenecks, regional power risks, and geopolitical factors continue to disrupt flows and amplify price swings. Demand is relentless and is expected to grow ~2.5% annually. Electrification, renewable energy build-out, EVs, and the explosion of AI data centres are all aluminium-intensive — and they show no signs of slowing. US tariffs. The administration doubled tariffs on aluminium imports to 50% in Jun 2025 (up from 10%). For the US market, the fallout is immediate and brutal. Aluminium costs for American buyers have jumped 40% since the tariffs doubled, pushing total prices above $5,200/t. Industries like automotive, construction, and packaging are getting hammered – think higher manufacturing expenses, squeezed profit margins, and inevitable price hikes passed on to consumers. This could fuel broader inflation and even lead to demand destruction if prolonged US Midwest premium hit a record ~100c/lb (~$2,046/t). 50% tariffs on aluminium imports, implemented last Jun and intended to bolster domestic production. Tariffs were meant to stimulate domestic primary aluminium production after a prolonged period of decline which left just four operating smelters. The immediate impact has been limited to Century Aluminum's, opens new tab restart of 50kt of idled capacity at its Mt. Holly plant in South Carolina. The smelter will return to full capacity by Jun. These duties have drastically reduced imports, especially from Canada (which supplies over 70% of US primary aluminium), leading to plummeting inventories and a supply crunch. The US imported approximately 4.87Mt of aluminium in 2025, a decrease of over 10% compared to 2024, according to data from the International Trade Administration and S&P Global. Canada declined 26% to 2.33Mt in 2025 from 3.15Mt in 2024. Conversely, imports from Asian producers, including the UAE, South Korea, Bahrain, and India, increased during this period. China exported minimal aluminium to the US, while Russia was out of the league due to sanctions. As a result, the US has turned to carbon-intensive Asian aluminium to replace hydro-powered aluminium from Canada. The intention was to protect domestic production and national security. But in reality, these tariffs are acting like a tax on US manufacturers -raising costs for everything from automotive parts to construction and packaging — while global supply tightness amplifies the pain.