The protectionist tariff strategy once touted by US President Donald Trump to revitalise domestic aluminium and steel production appears to be yielding the opposite effect - at least in early 2025. Industry indicators point to a clear downturn, with aluminium demand and production trending downward during the first quarter of the year.
Image credit: Aluminum Association
PMI signals early warning
The first signs of contraction came from industrial sentiment. Both the US and Canadian Purchasing Managers’ Indexes (PMI) dipped below the critical 50-point threshold in March 2025, registering at 49 and 46.3, respectively, indicating a shrinking manufacturing sector. Historically, a PMI below 50 signals a downturn in production and purchasing activity, which typically correlates with weakening demand for industrial metals like aluminium.
Demand contracts after 2024 rebound
According to data from the Aluminum Association, total aluminium demand in North America fell 4.1 per cent year-on-year in Q1 2025, slipping to 6.53 million tonnes, compared to 6.83 million tonnes in Q1 2024. This decline starkly contrasts the 4.3 per cent rebound recorded during the same period a year earlier.
“Demand has softened in the first quarter following a demand rebound in 2024,” said Charles Johnson, President and CEO of the Aluminum Association. “We’ll continue to track the market carefully to see if these trends continue or accelerate. Critically, the industry is calling for a targeted trade policy that addresses unfair trade while enabling access to abundant and affordable metal—not a 50% across-the-board tariff that drives down demand for our products.”
Production mirrors demand weakness
The downturn in demand is reflected in production data as well. The International Aluminium Institute reported a 2 per cent drop in North American aluminium output, which fell from 998,000 tonnes in Q1 2024 to 978,000 tonnes this year. In the US alone, production dropped more sharply, down by 3.5 per cent Y-o-Y from 172,000 tonnes to 166,000 tonnes.
Domestic shipments have not escaped the downturn either. Shipments by US and Canadian producers contracted by 6.7 per cent year-to-date through April 2025, highlighting the sluggish demand landscape.
Tariffs disrupt cross-border trade
The long-standing aluminium trade relationship between the US and Canada has also been disrupted. Steep tariffs imposed by the US have resulted in a 6.8 per cent decline in Canadian aluminium exports to the US during the first four months of 2025. The U.S. imported 1.09 million tonnes of aluminium (including scrap) from Canada during January–April 2025, down from 1.17 million tonnes over the same period last year.
At the same time, US aluminium imports increased overall, rising from 1.86 million tonnes to 2.01 million tonnes, driven primarily by a surge in scrap imports. Scrap imports jumped 30 per cent year-over-year, reaching 276,000 tonnes, a clear indication that trade policies are encouraging downstream industries to pivot toward recycled material as a cost-saving and tariff-avoiding alternative.
Imports of crude metal and flat-rolled products also saw modest growth, rising 5.65 per cent and 4.9 per cent, respectively, as buyers moved to secure supply from alternative markets ahead of anticipated policy changes.
Scrap surges as industry adapts
A notable development is the 18.9 per cent year-over-year increase in aluminium scrap inventories in April, a direct consequence of tariff-induced shifts in procurement strategies. With higher costs and limited access to primary metal, many industries are ramping up their use of secondary aluminium to maintain operations and margins.
Conclusion: a policy in need of rethink
The first quarter of 2025 paints a sobering picture for North America’s aluminium industry. What was once envisioned as a resurgence fueled by tariffs now appears to be a market stifled by uncertainty, softening demand, and disrupted trade flows.
If the current trajectory continues, policymakers may face mounting pressure to recalibrate their approach. Industry leaders are already calling for more surgical, targeted trade measures that would curb unfair competition without dampening domestic demand or choking critical supply lines.
The aluminium sector, once central to the US industrial revitalisation narrative, is now at a critical inflection point. Whether it rebounds or retreats further will depend largely on the policy choices made in the coming quarters.
