U.S. Aluminum Premiums Surge as Trump Doubles Tariffs on Canadian Imports

Premiums for aluminum buyers in the U.S. physical market surged to record highs on Tuesday following President Donald Trump’s announcement that tariffs on Canadian aluminum would double to 50%. The increase, set to take effect Wednesday, comes in response to Ontario imposing a 25% tariff on electricity exports to the U.S.

Physical aluminum transactions typically involve the London Metal Exchange (LME) benchmark price plus a premium covering taxes, transport, and handling costs. Traders anticipate further premium increases as producers pass on the additional costs of tariffs.

Canadian smelters supply the majority of primary and alloyed aluminum to the U.S., which is essential for the transport, packaging, and construction industries. According to Trade Data Monitor (TDM), Canada accounted for 70%—or 3.92 million metric tons—of aluminum exports to the U.S. in 2024.

Analysts estimate that the originally planned 25% tariff would have required premiums to rise to 47 cents per pound, or over $1,000 per metric ton, to offset costs. On Tuesday, the U.S. Midwest duty-paid aluminum premium surged to 45 cents per pound (over $990 per metric ton), marking a 20% increase from Monday and a 70% rise since the start of 2025.

During his previous presidency, Trump imposed aluminum tariffs in 2018 to incentivize domestic production. However, Macquarie analysts noted last month that U.S. aluminum production has continued to decline due to thin or negative margins, with tariffs failing to spur long-term supply growth.

While U.S. aluminum premiums have risen sharply, premiums in other regions have dropped as supply originally destined for tariff-affected markets is redirected. In Europe, the duty-paid aluminum premium has fallen to $240 per metric ton, the lowest since January 2024, and is down more than 35% since the beginning of 2025.