Understanding US Tariffs on Aluminum and Steel
The implementation of a 25% tariff on imports of steel and aluminum from all countries marked a significant shift in US trade policy when President Donald Trump enacted these measures on March 12, 2025. These tariffs cover a comprehensive range of aluminum products, including unwrought aluminum, bars, rods, tubes, structures, profiles, wire, plates, sheets, strips, and foil. The scope extends beyond raw materials to encompass manufactured goods such as nails, tacks, staples, and screws.
The impact of these us tariffs on aluminium and steel resonates throughout the US economy, affecting everything from beverage can production to electric vehicle manufacturing. With Canada supplying 75.70% of total US unwrought aluminum imports, the US-Canada trading relationship faces particular scrutiny under this policy framework.
What Are the US Aluminum and Steel Tariffs?
The 25% tariff imposed on steel and aluminum imports represents one of the most significant protectionist trade measures in recent US history. Implemented by the Trump administration, these tariffs apply universally to imports from all countries, though their impact varies dramatically depending on trading relationships.
In 2024, the US imported over 3.62 million tonnes of unwrought aluminum, with Canada supplying the vast majority at 2.74 million tonnes (75.70% of total imports). Beyond unwrought aluminum, Canada also provided substantial quantities of processed aluminum products, including 86,128 tonnes of aluminum bar, rod, and profiles, 191,237 tonnes of aluminum wire, and 126,483 tonnes of aluminum sheet thicker than 0.2mm.
"The costs associated with these tariffs become embedded in metal pricing," explains a US market participant. "There isn't a specific entity that receives a 'tariff bill' – rather, the costs are incorporated into the material price and passed through the entire supply chain."
How Are Industries Affected by Aluminum Tariffs?
Beverage Can Industry Impact
The beverage can industry faces particularly acute challenges from aluminum tariffs. With aluminum serving as the primary material for beverage packaging, increased costs have raised concerns about consumer price hikes and potential shifts in packaging strategies.
The Can Manufacturers Institute has warned of "serious impacts" on the US economy if tariffs continue, with Robert Budway noting that "some producers are considering a return to more plastic packaging – reversing years of environmental progress in recyclability."
Currently, the aluminum can recycling rate in the US stands at 43%. New can production requires a specific blend of materials: 53% post-consumer scrap, 18% post-industrial scrap, with the remainder necessarily coming from primary aluminum. This technical requirement means the industry cannot simply recycle its way out of tariff impacts.
Automotive Industry Challenges
For automotive manufacturers, who represent major aluminum consumers, tariffs create complex strategic challenges. Aluminum is extensively used in body parts, chassis, wheels, transmissions, engines, and numerous other components, making the industry particularly vulnerable to price increases.
According to a 2023 Ducker Carlisle study, the average electric vehicle contained 885 pounds of aluminum per vehicle in 2022 – a staggering 85% more aluminum than non-EV vehicles. This disproportionate impact on electric vehicles comes at a critical time for the US automotive industry's transition toward electrification.
Industry sources express significant uncertainty about manufacturers' ability to pass these costs to consumers in an increasingly competitive global market. Trump's tariff policies and their impact on metal prices have created additional challenges for manufacturers attempting to maintain global competitiveness.
Construction Sector Consequences
The construction industry faces layered costs that affect both single-family and multifamily housing projects. Aluminum is integral to modern construction, finding applications in siding, roofing, walls, windows, doors, and numerous other building components.
The National Association of Home Builders (NAHB) estimates that tariffs add approximately $9,200 to the cost of building a typical new home. This price increase comes at a particularly challenging time for the housing market, with builder confidence falling three points from February to March 2025.
"These tariffs directly contradict efforts to improve housing affordability," says Buddy Hughes of the NAHB. "We're seeing the lowest builder confidence level in seven months, with tariffs being a significant contributing factor."
Aerospace Industry Concerns
The aerospace industry requires high-quality, high-purity aluminum for its specialized applications. The sector relies on specific alloys (6061, 6065, and 7075) that demand minimal impurities and exacting quality standards.
Most aerospace-grade aluminum is sourced from Canada, making the industry particularly vulnerable to US-Canada trade tensions. Aerospace manufacturers have expressed concern about significantly higher prices affecting production costs and international competitiveness.
The stringent requirements for aerospace aluminum cannot be easily substituted with domestic sources in the short term, creating a complex challenge for an industry already facing global competition and supply chain pressures.
How Do Tariffs Affect US Competitiveness?
Impact on US Exports
US manufacturers using aluminum as a primary input face a competitive disadvantage in global markets due to increased production costs. This creates what Tesla described as a "double penalty effect" in its letter to the US Trade Representative – manufacturers face both higher production costs and reduced ability to compete on price in export markets.
The result is a complex ripple effect through the economy, with manufacturers either absorbing margin compression or passing costs to consumers, potentially reducing demand. For export-focused businesses, the challenge is particularly acute as foreign competitors without similar tariff burdens can offer more competitive pricing.
Understanding global commodity market insights amid political dynamics has become increasingly important for businesses attempting to navigate these complex trade environments.
Industry Positions on Tariffs
The Aluminum Association's Stance
The Aluminum Association has welcomed the 25% tariff on foreign aluminum while simultaneously calling for tariff-free access to the Canadian market. This nuanced position reflects the complex realities of the aluminum supply chain.
Charles Johnson, CEO of the Aluminum Association, has highlighted the $10 billion in domestic industry investment since 2016, while acknowledging that importing aluminum will remain necessary for "years if not decades." The association emphasizes the critical nature of the US-Canada trading relationship, noting that Canadian imports provide energy equivalent to at least 4 Hoover Dams, and that one Canadian smelter job supports approximately 13 US aluminum jobs downstream.
"The integrated North American aluminum market is essential to maintaining US competitiveness," Johnson explained. "While we support measures to address global overcapacity, we must recognize the strategic importance of Canadian aluminum to US manufacturing."
According to the Center for Strategic and International Studies, these tariffs represent a significant shift in US trade policy with long-term implications for international trade relationships.
What Are the Economic Implications of Aluminum Tariffs?
Price Effects Across Supply Chains
The tariffs create cascading cost increases throughout supply chains as manufacturers incorporate higher material costs into their pricing strategies. Unlike some taxes that are separately itemized, tariff costs become embedded in the base price of materials and subsequently affect all downstream products.
This integration of costs creates challenges for economic analysis and for businesses attempting to isolate and address tariff impacts. The diffuse nature of these costs means that no single entity receives the "tariff bill" – instead, it manifests as general price inflation across aluminum-dependent sectors.
Navigating US tariff risks in metal markets has become an essential skill for businesses operating in this environment. Furthermore, economists are increasingly concerned about the new commodity super cycle reshaping global supply chains and how it intersects with these tariff policies.
Consumer Cost Considerations
Consumers ultimately bear much of the tariff burden through higher prices for goods containing aluminum. This effect is particularly notable in beverage packaging, automotive products, and housing markets.
The National Association of Home Builders has warned that the $9,200 average cost increase per new home directly impacts housing affordability. Similarly, the Can Manufacturers Institute predicts an "inflationary impact" at grocery stores as beverage packaging costs rise.
For consumers shopping for vehicles, especially electric models with their higher aluminum content, price increases may not be explicitly labeled as tariff-related but nonetheless contribute to overall cost growth in the sector. The broader economic impact of these us tariffs on aluminium and steel extends far beyond the industrial sectors directly affected.
FAQs About US Aluminum and Steel Tariffs
Which Countries Are Most Affected by US Aluminum Tariffs?
Canada is most significantly impacted by US aluminum tariffs, providing 75.70% of US unwrought aluminum imports and substantial amounts of processed aluminum products. This reflects the deeply integrated nature of the North American aluminum supply chain.
How Much Do Tariffs Add to Construction Costs?
According to the National Association of Home Builders, tariffs add approximately $9,200 to the cost of building a typical new home. This increase affects both affordability for buyers and profitability for builders.
Will Tariffs Help or Hurt US Aluminum Production?
The Aluminum Association supports tariffs on foreign aluminum while noting that rebuilding domestic capacity will take "years if not decades," creating a complex balance between protection and supply needs. The organization acknowledges that imports, particularly from Canada, will remain essential to meet US demand.
How Much Aluminum Does an Electric Vehicle Contain?
According to a 2023 Ducker Carlisle study, the average electric vehicle contained 885 pounds of aluminum per vehicle in 2022, which is 85% more than non-EV vehicles. This disproportionate usage makes the electric vehicle sector particularly sensitive to aluminum price fluctuations.
What Alternative Materials Might Replace Aluminum Due to Tariffs?
Some beverage producers are considering returning to more plastic packaging if aluminum can costs become prohibitive. This potential shift raises environmental concerns given aluminum's superior recyclability compared to many plastics.
How Are Other Countries Responding to US Aluminum Tariffs?
While Canada faces the most significant impact given its dominant position in US aluminum imports, other countries and regions are also developing responses. The European Union has announced it will delay potential countermeasures until April 2025, giving time for diplomatic negotiations while preparing potential retaliatory tariffs on US exports.
According to PwC's analysis, these tariffs and the corresponding international responses represent one of the most significant trade tensions in recent history, with Trump's policies reshaping global commodity markets in ways that will have lasting economic impacts.
Want to Know When the Next Major Mineral Discovery Hits the ASX?
Don't miss the next market-moving announcement that could transform your investment portfolio. Visit Discovery Alert's discoveries page to explore how their proprietary Discovery IQ model delivers real-time notifications on significant mineral discoveries across the ASX, giving you the crucial edge in today's competitive markets.
