Premiums for consumers buying aluminum on the physical market in the United States soared to record highs on 11 March after President Donald Trump said he would double tariffs on Canadian metal to 50%.
The doubling of levies, in response to the Canadian province of Ontario placing a 25% tariff on electricity coming into the US, take effect from 12 March 2025.
Physical market consumers of aluminium usually pay the London Metal Exchange (LME) benchmark aluminium price plus a premium covering taxes, transportation and handling expenses.
As producers pass on as much of the additional tariffs as they can, traders forecast premiums will keep rising.
Most basic and alloyed aluminium imported into the United States comes from Canadian smelters. The building, packaging, and transportation sectors all depend on aluminium.
Information source Trade Data Monitor (TDM) indicates that almost 70%, or 3.92 million metric tonnes of the main and alloyed aluminium exported to the United States last year originated from Canada. Originally intended to be a 25% tax, researchers have projected that the premium would have had to grow to 47 cents a pound or more than $1,000 a tonne to cover any additional expenses.
The US Midwest duty-paid aluminium premium surged to 45 US cents per lb, or more than $990 a metric tonne, a change of about 20%. Since 2025’s beginning, it has risen more than seventy percent.
In 2018, Trump intended to boost capacity by using taxes on aluminium under his previous presidency.
Analysts were dubious investors would be confidence to pay the big capital amounts needed since aluminium smelters take more time to build than political election cycles. Although US consumers’ premiums have increased, industry sources have indicated they are probably going to continue declining elsewhere as aluminium manufactured in nations with import taxes is redirected.
The lowest since January last year, the duty-paid physical market premium in Europe has decreased to $240 a metric tonne. Since 2025 started, it has dropped more than 35%.