Price premiums for aluminum in the U.S. physical market have surged to record highs as buyers brace for the reinstatement of 25% tariffs on aluminum imports starting March 12. The tariffs, part of President Donald Trump’s trade policy, have already taken effect for imports from Mexico and Canada, further tightening supply in a market heavily reliant on foreign aluminum.
The U.S. Midwest duty-paid aluminum premium has risen nearly 60% since the start of 2025, reaching over 40 cents per pound (approximately $900 per metric ton). Analysts suggest the premium may need to climb to 47 cents per pound to fully offset the impact of the tariffs.
“Ultimately, the U.S. is a net importer of aluminum. Producers will not want to pay the tariff; they will try to pass on as much as they can to consumers,” said Michael Widmer, an analyst at Bank of America. “This leaves you with a market where aluminum units will potentially be diverted away from the United States.”
Canada, the largest supplier of aluminum to the U.S., accounted for 70% of the 3.92 million tons imported last year. Other major exporters affected by the tariffs include Argentina, Australia, Mexico, and EU countries. Saudi Arabia, the second-largest exporter to the U.S., is not currently subject to the tariffs.
The U.S. lacks sufficient domestic production capacity to meet demand, making it heavily dependent on imports. Eivind Kallevik, CEO of Norwegian aluminum producer Hydro, noted that higher premiums and costs are inevitable if the U.S. aims to maintain its manufacturing output for cars and other products.
Meanwhile, aluminum premiums in Europe have dropped to 11-month lows at $240 per metric ton, as supplies previously destined for the U.S. are diverted to other markets.
The tariffs are expected to increase costs for industries reliant on aluminum, including transportation, construction, and packaging, potentially leading to higher prices for consumers.