Collapsed Canada tariff talks put Indiana's aluminium jobs back in the spotlight

Indiana has emerged as an unlikely flashpoint in the latest round of US-Canada trade friction, after Washington's now-collapsed negotiations with Ottawa briefly put a proposed cut to aluminium tariffs on the table, one that industry advocates say would have hit the state's fabrication workforce hard.

Industry veterans argue that Indiana, one of the last significant strongholds of US aluminium manufacturing, had much to lose in a deal that ultimately fell apart.

What was on the table

As part of the recent US-Canada trade talks, the Trump administration had proposed cutting the tariff on Canadian primary aluminium from 50 per cent to 25 per cent, while also extending a similar cut to fabricated aluminium products. Those talks broke down in late August, prompting Washington to impose fresh 50 per cent tariffs on roughly USD 20 billion worth of Canadian goods, with Canada set to respond with dollar-for-dollar retaliation from September 8. US officials have said the offer to Canada also touched on steel, autos and lumber tariffs, in exchange for concessions including closer aerospace supply-chain coordination and movement on a renewed USMCA.

Indiana's stake in fabrication

Indiana's aluminium extrusion, rolling and sheet plants employ roughly 2,500 people across 38 facilities, accounting for nearly 8 per cent of all US extrusion jobs, a concentration around four times the national average. Wages in the sector are described as strong, averaging roughly USD 1,700 a week in extrusion and USD 1,400 a week in sheet and plate. Nationally, aluminium fabricators are said to generate more than 75 per cent of the industry's USD 41.3 billion in earnings and employ approximately 192,000 workers.

A structural cost disadvantage

It is evident why US fabricators are especially exposed to tariff changes. While the London Metal Exchange sets the global base price for aluminium, buyers also pay a regional delivery premium. June figures show the US premium averaging around USD 1.17 per pound, compared with roughly 21 cents in Canada and 16 cents in Mexico, a gap of nearly USD 1 per pound that the existing 50 per cent tariff on finished products only just offsets. Halving that tariff, he argues, would leave US producers unable to close the gap.

Smelting capacity and the Warrick plant

The piece points to domestic smelting capacity as the underlying issue: in 2025, US smelters produced only 660,000 tonnes of the 5.7 million tonnes of aluminium consumed nationwide. Indiana's only smelter, Alcoa's Warrick facility near Evansville, illustrates the strain — it was idled in 2016 and restarted in 2018 specifically to supply the adjacent rolling mill, and currently runs just two of its five production lines.

Warrick has stayed viable largely because it generates its own electricity on site, underscoring his broader point that power costs, which can account for up to 40 per cent of a smelter's operating budget, are the real constraint on rebuilding US primary production, more so than tariff levels alone.

The policy argument

Framing aluminium as a national-security material essential to military hardware, the column references the Commerce Department's 2018 determination that downstream tariff coverage was necessary alongside primary metal tariffs.

Washington should hold the line on full 50 per cent tariffs for both primary and downstream aluminium products, while separately pursuing long-term power agreements to expand domestic smelting capacity. Cutting fabrication tariffs for short-term diplomatic gain, he writes, risks undermining Indiana's manufacturing base rather than strengthening it.

It's worth noting the piece is an opinion column from an economist at the CPA, a US trade group that has consistently advocated for tariff protection of domestic manufacturing, i.e., a stance not shared by all voices in the aluminium trade debate, including import-reliant fabricators and business groups that have warned tariffs raise costs across supply chains.

But with US-Canada trade relations freshly strained and the future of tariff levels on aluminium still an open question, Indiana's fabrication sector looks set to remain a bellwether in the broader argument over how America rebuilds its aluminium industrial base.