Alcoa Warns 50% Tariff Hikes Aluminum Prices, Risks Demand

Alcoa Corporation, the largest aluminum producer in the U.S., has raised concerns about the impact of import tariffs on the domestic aluminum market. CEO Bill Oplinger warned that the 50% tariff imposed by former U.S. President Donald Trump on imported aluminum has led to a significant increase in domestic aluminum prices, which could ultimately be borne by American consumers or the company's shareholders.

Oplinger's comments come as a follow-up to his earlier statements in January, where he mentioned that tariffs would have a "suppressive effect" on demand. The Trump administration initially imposed a 25% tariff on imported aluminum in March, which was later doubled to 50% in June. The administration justified these measures as necessary to protect the U.S. aluminum industry and revitalize production. However, Oplinger revealed that these tariffs have resulted in an annual cost of $850 million for Alcoa.

Oplinger explained that before the tariffs were implemented, buyers had already stockpiled large quantities of aluminum in the U.S. Now that these stocks have been depleted, buyers are turning to other regions, such as Canada, for their aluminum needs. While Alcoa's order volume in the U.S. remains strong, and the so-called "tariff premium" has risen to cover additional costs, long-term risks are becoming apparent.

As a leading player in the U.S. aluminum industry, Alcoa's warnings highlight the market's long-term concerns about tariff policies. Aluminum, a fundamental metal used in various products from window frames to Ford F-150 pickups, has seen its price surge, significantly increasing costs for the construction and manufacturing sectors. Economists worry that this cost pressure could be passed on to end consumers, leading to inflation and ultimately suppressing market demand.

Oplinger has been actively lobbying in Washington and with governments around the world to highlight the negative impacts of these tariffs. He emphasized that it is difficult to imagine that demand for aluminum in the U.S. would not be affected when domestic prices are systematically 50% higher than global prices. The situation underscores the complex interplay between trade policies, market dynamics, and economic outcomes, as well as the need for a balanced approach to tariffs that considers both short-term and long-term impacts.