US aluminum tariffs hurt manufacturers as Canada seeks new markets

President Trump’s decision to impose a 50% tariff on aluminum from Canada is backfiring for U.S. industry, which still depends heavily on the metal for sectors such as automotive, construction and aerospace. The tariff has lifted the premium paid for aluminum to record levels, according to a report, and there are few viable domestic substitutes because the United States now operates only four smelters compared with 24 a quarter-century ago.

Canada provides roughly 70% of U.S. aluminum imports, benefiting from cheap hydroelectric power in Quebec that U.S. plants cannot match. While the U.S. seeks to replace the supply, a $4 billion smelter project in Oklahoma faces resistance over environmental and funding concerns, and Rio Tinto is investing $1.5 billion to modernize its Quebec operations. Meanwhile, Canadian exporters have boosted shipments to Europe by 77% year-on-year, indicating a pivot away from the increasingly hostile American market.