Trumps Tariffs Spark Record High Aluminium Premiums in US Physical Market

The aluminium market is experiencing unprecedented volatility, with US physical market aluminium premiums reaching record highs due to the looming threat of tariffs on imports. At the centre of this storm is President Donald Trump, who plans to restore 25% tariffs on aluminium imports from March 12. This move has sent shockwaves through the industry, with buyers on the physical market paying a premium that typically covers taxes, transport, and handling costs. The U.S. Midwest duty-paid aluminium premium has surged to above 40 U.S. cents a lb, or nearly $900 a metric ton, representing a nearly 60% increase since the start of 2025.

The tariffs on aluminium imports from countries such as Mexico, Canada, and the European Union are expected to have a significant impact on the US aluminium market. According to Bank of America analyst Michael Widmer, "Ultimately, the U.S. is a net importer of aluminium... Producers will not want to pay the tariff, they will try to pass on as much as they can to consumers." This could lead to a market where aluminium units are diverted away from the United States, resulting in higher premiums and costs for consumers.

The US aluminium market is heavily reliant on imports, with Canadian smelters accounting for the bulk of primary and alloyed aluminium exports to the United States. Eivind Kallevik, CEO at Norwegian aluminium producer Hydro, notes that "The US cannot produce all that aluminum, they don't have the capacity... If the U.S. is going to keep manufacturing cars and other products, they will need to attract the metal. That means higher premiums and costs." The second largest exporter to the United States is Saudi Arabia, which is not included in the list of countries subject to tariffs. Analysts predict that aluminium produced in countries where import levies apply will likely be diverted to Europe, where duty-paid physical market premiums have dropped to 11-month lows.

As the aluminium market continues to evolve, it is essential to stay informed about the latest developments and their potential impact on the industry. With the US aluminium market facing unprecedented challenges, buyers and producers must navigate the complex landscape of tariffs, premiums, and global trade agreements. By understanding the factors driving aluminium premiums and tariffs, industry stakeholders can make informed decisions and stay ahead of the curve in this rapidly changing market.