Increased Trade Disputes between US and Canada: Imposition of 50% Customs Duties on Aluminium Imports from Canada

The North American aluminum market is experiencing significant disruption following the implementation of steep tariffs on Canadian imports, as outlined in the Trade Expansion Act of 1962 (Section 232).

Since the tariff announcement in early 2025, aluminum prices in the U.S. have risen significantly above international benchmarks. This surge has been felt across various industries, including automotive manufacturing, aerospace, construction, packaging, and consumer electronics.

The U.S. aluminum industry, with only four operating smelters and insufficient domestic capacity to meet demand, faces structural limitations in achieving self-sufficiency. As a result, major producers have begun purchasing aluminum within the U.S. market rather than importing their own production across the border.

The tariffs, initially set at 25%, were doubled to 50% by June 2025. This increase has led to substantial costs for producers with Canadian operations. Major producers have reported gross costs of $321 million in the first half of 2025 due to the tariffs' impact on investments.

No specific companies have been named in the available information as having incurred costs of at least 135 million USD due to the U.S. tariffs on Canadian aluminum imports in the first six months of 2025. However, another leading aluminum company reported facing $135 million in costs during the same period from tariffs on their Canadian shipments.

Canadian aluminum producers face significant challenges, including contract cancellations from U.S. buyers and pressure to find alternative markets for their production. The increased focus on developing alternative sourcing strategies is a cascading effect throughout manufacturing supply chains due to the tariffs.

Reassessment of long-term supply agreements and pricing models is also a cascading effect throughout manufacturing supply chains. The tariffs affecting iron ore and other metals are adding to the supply chain disruptions in the aluminum market.

In response to these disruptions, potential changes in the aluminum industry include the development of alternative global supply routes, expansion of U.S. domestic smelting capacity (though constrained by energy costs), increased vertical integration by downstream manufacturers seeking price stability, and innovation in aluminum recycling and alternative materials to reduce reliance on primary aluminum.

The U.S. Midwest premium—the amount added to global price benchmarks for delivery to that region—jumped 81% since early June alone. These cascading effects throughout manufacturing supply chains due to the tariffs are expected to continue as industries adapt to the new economic landscape.

Increased Trade Disputes between US and Canada: Imposition of 50% Customs Duties on Aluminium Imports from Canada