I’ve been tracking metal market dynamics for almost a decade, and what’s happening now with aluminum premiums feels like 2018 all over again—only potentially more disruptive. Last week in Pittsburgh, a procurement officer for a major automotive supplier told me he’s “scrambling to secure supply chains” after U.S. aluminum premiums hit their highest level since 2022.
The Midwest premium—essentially the extra cost American buyers pay above global aluminum prices—has surged to 21.5 cents per pound, representing a 27% increase in just two months. This spike follows the White House’s decision to double aluminum tariffs to 20% for most countries, while maintaining the 10% levy on Canadian producers that had been reinstated earlier this year.
For Canadian aluminum producers, who supply roughly 60% of U.S. aluminum imports, this presents both challenge and opportunity. The price advantage over global competitors remains, but industry analysts warn the broader effects could undermine the integrated North American supply chain.
“The tariff differential is creating market distortions that ultimately hurt manufacturers on both sides of the border,” explained Jean Simard, President of the Aluminum Association of Canada, during our phone conversation yesterday. “Canadian smelters benefit from preferential treatment, but the overall contraction in aluminum consumption hurts everyone’s volumes.”
Market data from the London Metal Exchange shows aluminum prices have increased 7.4% since the tariff announcement, currently trading around $2,450 per metric ton. Yet this global price movement doesn’t fully capture the regional dynamics affecting North American producers and consumers.
Walking through Aluminerie Alouette’s smelting facility in Quebec last month—North America’s largest aluminum plant—I witnessed the massive production capacity that’s been built around serving U.S. markets. Plant manager Claude Gosselin pointed to their recent $100 million efficiency upgrade, saying: “We invested with continental integration in mind. These tariffs create artificial barriers in what should be a seamless market.“
The ripple effects extend beyond the primary metals industry. In Windsor, Ontario, auto parts manufacturer Martinrea International has reported increasing material costs and supply uncertainties. “We’re caught between metal suppliers raising prices and automotive customers resistant to cost pass-throughs,” said Rob Wildeboer, Executive Chairman, at an industry conference in Toronto.
Economic modeling from the C.D. Howe Institute suggests the aluminum tariffs could ultimately reduce Canadian exports by $2.8 billion annually if market conditions don’t adjust. Their analysis indicates approximately 4,500 jobs across the Canadian aluminum value chain could be affected through reduced production or shifted supply patterns.
For perspective, it’s worth noting that the U.S. domestic aluminum production meets only about 10% of its consumption needs. The Aluminum Association reports American smelting capacity has declined by more than 50% over the past two decades, making import restrictions particularly problematic for downstream industries.
The situation creates particularly acute challenges for specialized product categories. Small Canadian extruders producing custom profiles for aerospace applications face different market dynamics than commodity producers. “We can’t simply redirect specialized aerospace-grade alloys to other markets,” explained Michel Lamontagne, operations director at a Quebec-based specialty mill that requested anonymity due to ongoing customer negotiations.
The tariff situation has sparked diplomatic engagement, with Canadian Trade Minister Mary Ng describing the measures as “deeply concerning” during ministerial consultations last week. Sources within Global Affairs Canada indicate that while formal dispute resolution hasn’t been initiated, technical teams are preparing documentation on potential World Trade Organization and USMCA violations should diplomatic solutions fail.
American manufacturers have also voiced opposition. The Beer Institute estimates aluminum tariffs cost beverage producers over $1.4 billion since their introduction. “When you’re producing millions of cans daily, even pennies per pound translate to enormous cost increases,” said Jim McGreevy, the institute’s president.
As I file this report from Detroit, where I’m meeting with automotive suppliers navigating these market disruptions, the overwhelming sentiment is uncertainty. What remains clear is that while tariff policies may change quickly, industrial supply chains cannot. The North American aluminum ecosystem developed over decades of integration will require either policy adjustment or painful restructuring in the months ahead.
