Canadian aluminium smelters are sharply reducing primary metal exports to the US following an escalation in tariffs under the Trump administration. Beginning in March 2025, the US reinstated a 25 per cent tariff on Canadian aluminium, which was then unexpectedly doubled to 50 per cent in June, causing significant disruption to established trade flows and leaving Canadian exporters little time to adjust.
Major producers such as Alcoa Corp have led this shift by diverting more than 100,000 metric tons of Canadian aluminium away from US buyers to alternative global markets, mainly in Europe. This pivot has been facilitated by the fact that approximately 30 per cent of Alcoa's Canadian production is not bound by annual contracts, allowing flexible redirection to more favourable markets.
Recent trade data confirms this change, with Canada exporting 11,800 tonne to the Netherlands and 25,500 tonne to Italy in April and May 2025, a sharp increase compared to historical levels. As a result, US imports of primary aluminium from Canada fell to just 268,000 tonne in May, the lowest level since December 2022.
From January to April 2025, the US imported a total of 874,000 tonnes of primary aluminium from Canada. These volumes fluctuated month-to-month due to tariff announcements and market responses: imports started at 248,000 tonne in January, fell to 209,000 tonne in February as tariffs approached, rebounded to 250,000 tonne in March, likely as suppliers front-loaded shipments before hikes and then sharply declined to 167,000 tonnes in April following the surprise tariff doubling.
US aluminium buyers turn to recycled metal
Confronted with higher costs and restricted supply of primary metal, US manufacturers are increasingly turning to recycled aluminium, which faces much lower or no reciprocal tariffs, making it a more economically attractive option.
Correspondingly, aluminium scrap imports surged by 40 per cent year-over-year from March to May 2025, totalling around 227,000 tonne. Domestic recycling is also scaling up, with the US Geological Survey reporting a 4.5 per cent increase in aluminium recovery from scrap to 1.222 million tonnes between January and April 2025.
This shift reflects downstream industries’ preference for recycled aluminium, which is not only cheaper and faster to process but also free from complex trade restrictions.
US increases aluminium imports from Europe and UK
The US is also leaning more on imports from Europe and the UK to offset loss of Canadian supply. US aluminium scrap imports showed a rising monthly trend during the first four months of 2025, increasing from about 1,340 tonne in January to 2,360 tonne in April.
Additionally, the US imported a total of 5,852 tonne of aluminium scrap from European Union countries over the same period, underscoring the growing importance of European scrap exports.
The surge in exports has drawn regulatory attention in Europe, prompting the European Commission to activate a trade surveillance system to monitor these developments and consider possible export restrictions, with a decision expected by late September.
Market volatility and uncertainty persist
This evolving supply landscape is further complicated by market volatility. The US Midwest aluminium premium, a key indicator of domestic prices has soared from 24 cents per pound in January to 68 cents following the tariff hikes.
However, as Alcoa CEO William Oplinger points out, this premium remains insufficient to cover the full costs of tariffs and transportation, which require a level between 70 and 75 cents per pound to make Canadian exports to the US economically viable.
Consequently, buyers remain cautious, drawing down inventories and limiting new spot purchases while watching for potential exemptions and ongoing trade negotiations, particularly between the US and Europe, which are exploring quota systems and alliances to address overcapacity concerns, especially from China.
Outlook: continued reliance on scrap and imports amid uncertain tariffs
Given the high costs and long lead times associated with restarting US smelters such as Alcoa’s announced USD 100 million, one-year refurbishment plan, the prospect of significantly increased domestic production in the near term remains limited.
Until there is greater clarity on tariff exemptions or new trade frameworks, the US market will likely continue to rely heavily on recycled aluminium and alternative imports from Europe and the UK, while primary Canadian aluminium exports remain largely redirected.
This dynamic reflects the interplay of tariff policy, contract flexibility, and global trade realignment reshaping North America’s aluminium supply chain in 2025.
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