Aluminium Prices Jump Sharply Following Tariff Hike
Aluminium premiums in the U.S. physical market surged on Monday after President Donald Trump announced a plan to double tariffs on imported steel and aluminium—from 25% to 50%. The new rate is scheduled to take effect on June 4 and has already triggered a sharp increase in prices.
The U.S. depends heavily on imported aluminium, particularly from Canada, which supplies nearly half of the country’s needs across industries like transportation, packaging, and construction. Physical market buyers typically pay the London Metal Exchange (LME) benchmark price along with a premium covering transport, taxes, and handling.
That premium—the U.S. Midwest duty-paid aluminium premium—jumped to $0.58 per pound, or $1,279 per metric ton, marking a 54% surge from Friday and a 164% increase since January. The spike was partly driven by June 2 being the first trading day of the new month, a time when premiums often adjust significantly.
Goldman Sachs estimates that premiums may rise further to $0.68–$0.70 per pound to fully account for the 50% tariff. LME aluminium prices also edged higher, up 0.4% to $2,453.50 per ton.
Domestic Capacity Lags as Global Trade Flows Shift
The sharp premium rise reflects long-standing issues with U.S. aluminium production, which hasn’t seen a new primary smelter built in 45 years. High energy costs and infrastructure challenges have limited growth in domestic capacity. However, that could change with Emirates Global Aluminium’s recent $4 billion investment in a U.S. plant, aiming to produce 600,000 metric tons annually by the end of the decade.
For comparison, the U.S. imported 2.7 million tons of unwrought aluminium from Canada in 2024, according to Trade Data Monitor.
The reimposition of tariffs—among Trump’s first trade measures upon returning to office in January—has also reshaped international trade flows. The initial 25% tariffs caused some aluminium producers to divert shipments to Europe, resulting in a 45% drop in European premiums since the start of 2025. At the same time, aluminium scrap exports from the EU to the U.S. have surged, as American buyers look for cheaper alternatives in a tightening market.
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