Bill Oplinger, the CEO of Alcoa (AA.US), the largest aluminium producer in the United States, issued a warning in an interview on Monday that import tariffs would stifle aluminium demand in the country, which is in direct opposition to the Trump administration's claim that "tariffs will revitalize the domestic industry."
Opinger pointed out that due to US President Donald Trump's imposition of a 50% tariff on imported aluminum, domestic aluminum prices in the United States have risen sharply. He emphasized that if the policy is not adjusted, it will ultimately be the American consumers or corporate shareholders who foot the bill for this part of the price increase.
This statement is an escalation of his January remarks, when he merely said that tariffs would have a "restraining effect" on demand. Looking back at the policy context, the Trump administration was the first to impose a 25% tariff on imported aluminum in March and then doubled the rate to 50% in June, claiming that this move was necessary to protect the US aluminum industry and revitalize production. Opinger disclosed that this tax rate has already imposed an annual tariff cost of approximately 850 million US dollars on Alcoa.
It is hard to imagine that demand would not be affected when the aluminum price in the United States is systematically 50% higher than the global average. Opinger said that he has lobbied among the governments of Washington and many other countries around the world to clarify the negative impact of tariffs.
He further explained that before Trump imposed tariffs, purchasers had already transported a large amount of aluminum into the United States in advance for stockpiling. Now that the inventory has been cleared, buyers are turning to importing aluminium from other regions such as Canada. Although Alcoa's order volume in the United States remains strong and the so-called "tariff premium" has risen simultaneously to cover the additional costs, long-term hidden dangers have emerged.
As a leading enterprise of Alcoa, Alcoa's warning highlights the market's long-standing concerns over tariff policies. Aluminum, as a base metal widely used in window frame manufacturing, Ford F-150 pickup trucks and other products, its soaring price will significantly push up the costs of construction and manufacturing. Economists are concerned that this cost pressure will be passed on to end consumption, triggering inflation and ultimately suppressing market demand.
Alcoa's share price has dropped by more than 17% so far this year due to weak demand for aluminium in the United States. At present, the demand for aluminium in the United States is being dragged down by a significant decline in exports and a reduction in industrial uses, with a clear weak market trend.
