On February 10, US President Donald Trump signed an executive order announcing the imposition of 25% tariffs on all imported aluminum products from March 12, and the removal of exemptions for traditional Allies such as Canada and Mexico. This policy is a comprehensive upgrade from the relevant policies of his first term, and the policy goal has shifted from industry protection to global supply chain restructuring. Key suppliers such as Canada and Mexico have announced they will retaliate. Under the contradiction of high energy costs and deep binding of the industrial chain, this policy or accelerate the reshaping of the global aluminum industry pattern.
The difference in Trump's tariff policy between his two terms in office
On February 10, US President Donald Trump signed an executive order announcing a uniform 25% tariff on all imported aluminum products from March 12. Compared with Trump's first term, this policy presents three major upgrading features: First, tax rate increase and exemption cancellation. Tariffs on imported aluminum have been raised from 10 percent in Trump's first term to 25 percent, and duty-free quotas and exemptions for trading partners such as Canada, Mexico and the European Union have been completely eliminated. For example, Canada's duty-free status as the largest supplier of primary aluminum to the United States (accounting for 58% of U.S. imports) was completely revoked. Second, the scope of taxation is expanded. In Trump's first term, aluminum derivatives (such as furniture, doors and Windows, bed frames, etc.) were included in the scope of taxation, and products with aluminum content of more than 50% were required to pay an additional surcharge of $2 / kg. Taking aluminum furniture as an example, the comprehensive tax rate has been increased from FREE+25+10 to FREE+25+10+25. Third, strengthen policy tools. Eliminate the channel for companies to apply for tariff exemptions, while tying tariffs to immigration policy and national security issues.
Structural differences in tariff policies on imported aluminum during Trump's two rounds of office
The core differences in aluminum tariff policy during the two terms of the Trump administration are reflected in the following four dimensions:
First, policy objectives: Trump's first term (2017-2021), with the protection of the US domestic aluminum industry as the core goal, invoked Section 232 of the Trade Expansion Act and imposed 10% tariffs on imported aluminum in the name of "national security threats". The policy objective of Trump's second term (2025-2029) has been upgraded to a comprehensive restructuring of the global supply chain, undermining the supply position of traditional Allies through indiscriminate high tariffs (25%), and using this as a bargaining chip in unilateral trade negotiations. Mexico, for example, would be asked to cooperate in cracking down on illegal immigration in exchange for negotiating an exemption from tariffs.
The second is the scope of implementation: During Trump's first term, he implemented an exemption policy for Allies such as Canada and Mexico, and only taxed some countries. As the largest supplier of primary aluminum to the United States, Canada has long enjoyed duty-free status. During Trump's second term, all exemptions and quotas were eliminated and the principle of taxation covering all countries without discrimination was implemented. For example, the duty-free status of Canadian aluminum products was completely revoked, and Mexico's 23% share of U.S. aluminum scrap imports was also included in the scope of the tax.
Third, enforcement: in Trump's first term, companies were allowed to apply for exemptions from tariffs on specific aluminum products on a case-by-case basis. During Trump's second term, the waiver mechanism was eliminated and a surcharge clause was added. For example, derivative products with aluminum content of more than 50% are subject to an additional surcharge of $2 / kg, and the tariff is bundled with other policies.
Fourth, supporting measures: Trump's first term was dominated by isolated tariff policies, which did not form linkage with policies in other areas. In his second term, Trump is building a systematic policy portfolio. Using tariffs as a pressure tool in border security negotiations; Linkage energy policy, through the "National Energy Board" to reduce the cost of electricity for local aluminum enterprises (US industrial electricity price of 0.087 US dollars/KWH, still 40% higher than Canada); Strengthen enforcement efforts, new customs review provisions to combat re-export trade, such as requiring importers to provide proof of origin for aluminum smelting.
The data show that the aluminum tariff policy implemented in Trump's first term has reduced the net aluminum imports of the United States from 56.3% to 39.8%, but the recovery of aluminum production capacity in the United States is limited, and aluminum production has increased slightly, but it still cannot meet the annual demand of 4.3 million tons. The upgrade of the imported aluminum tariff policy system reflects the Trump administration's shift from single industry protection to geoeconomic strategic instrumentalization.
A multidimensional perspective on the impact of the new round of US tariff policy
American industry differentiation and cost transmission
Us local aluminum short-term benefits and long-term worries: the new policy of 25% import tax on imported aluminum, for the US local aluminum enterprises constitute a positive is obvious. However, the average cost of electrolytic aluminum in the United States is $2,800 / ton, 30% to 40% higher than that in Canada ($2,100 / ton) and the Middle East ($1,900 / ton), and tariff protection is difficult to continue.
Downstream manufacturing cost crisis: A 10% tariff on imported aluminum products was imposed during Trump's first term, resulting in increased costs in industries such as auto manufacturing. According to statistics, during this period, the comprehensive imposition of import taxes and other factors, the cost of aluminum in the United States automobile manufacturing industry increased by 8% to 12%, the comprehensive cost of the aerospace industry increased by 15% to 20%, and the cost of food packaging industry increased by 10% to 15%. After the unified 25% tariff on imported aluminum products, the impact on the downstream aluminum industry in the United States will be greater.
Macroeconomic knock-on effects: According to the Peterson Institute, the US government's 25% tariff on imported aluminum products will lead to an additional 0.6% increase in US inflation and a 0.3% slowdown in GDP growth in 2025. The US Foreign Trade Council (NFTC) warned that the US domestic aluminum-intensive industry may outflow as a result, and is expected to lose 230,000 jobs, far more than the 12,000 new jobs in the aluminum industry.
Reconstruction of international supply chain and fission of alliance relationship
The double impact of the deep binding of the Canadian aluminum industry chain. In 2024, Canada exported 5.8 million tons of unrolled aluminum and aluminum to the United States, accounting for 72% of its total production. According to estimates, the 25% import tariff imposed by the US government will lead to the annual export loss of Canadian aluminum products of more than $4.5 billion, and smelting enterprises in Quebec may be forced to reduce production by 30%. The Canadian Aluminum Association warned that higher aluminum prices in the United States would feed through to the auto industry, pushing up the cost of models such as the Ford F-150 by about $800 per vehicle.
The risk of disruption of Mexico's processing trade model. As a major supplier of aluminum scrap and aluminum alloys to the United States (accounting for 23 percent of imports), Mexico's "process-re-export" model, established under the USMCA, will collapse. For example, the cost of engine blocks supplied by Nemak to General Motors will increase by 18%, which could force production to move to Brazil.
Opportunities and challenges of alternative competition in Brazil and emerging markets. Brazil's unwrought aluminum exports to the United States rose from 9% in 2017 to 15% in 2024, but it is limited by domestic electrolytic aluminum production capacity (only 1.1 million tons per year), and it is difficult to quickly fill the market vacancy that Canada has withdrawn. Emerging suppliers such as Vietnam and India are difficult to undertake high-end aluminum orders in the short term due to weak infrastructure (the average capacity utilization rate of Vietnamese electrolytic aluminum plants is only 65%).
The New Deal is unlikely to change the plight of American manufacturing
The 25% aluminum import tariff policy launched by the Trump administration marks the qualitative change of US trade protectionism from industrial defense to geo-economic game. This policy, aimed at systematically restructuring the global aluminum supply chain, will intensify multiple contradictions in its implementation in the future, thereby exposing deep structural flaws in the U.S. manufacturing industry. The result of the imposition of aluminum import tariffs in Trump's first term has proved that tariff barriers can not reverse the fact that the U.S. aluminum industry is declining, and the import dependence is still 39.8%. This comprehensive policy upgrade exposes the more dangerous strategic miscalculation of attributing the decline in manufacturing competitiveness to external shocks rather than internal structural contradictions, such as stagnant Labour productivity growth and ageing infrastructure.
To sum up, the essence of this tariff game is that the United States attempts to forcibly rewrite the logic of the division of labor of the global industrial chain with unilateralism, but its internal contradictions such as the defects of the energy structure, the hollowing out of the industry, and the loss of trust among Allies are doomed to make the policy effect seriously deviate from the strategic goal. The global aluminum industry's "post-American era" order reconstruction or thus kicked off.
