Rio Tinto Faces $300 Million in Costs Due to US Tariffs on Canadian Aluminum

Rio Tinto, the world's second-largest mining company, reported a $321 million cost from US tariffs on Canadian aluminum exports during H1. The company exports most of its aluminum to the US, where tariffs have caused significant disruption to the metal supply chain. US market premiums have struggled to offset the 50% tariff, leading to rising costs for US buyers. Industry executives warn of potential demand suppression.

The world's second-largest mining company, Rio Tinto, has reported a significant financial impact due to US tariffs on Canadian aluminum exports during the first half of 2025. The company disclosed that the tariffs resulted in gross costs of approximately $321 million, a substantial burden for the mining giant [1].

Rio Tinto's primary aluminum exports from Canada, amounting to approximately 723,000 tonnes, represent nearly three-quarters of its Canadian output. The tariffs, initially set at 25% in March and increased to 50% in June, have disrupted global metals supply chains and caused substantial financial strain on the company [1].

While higher premiums in the US have partially offset the increased costs, the rapid escalation of tariff rates to 50% has not been fully compensated for by the market. This has led to a temporary financial gap that has directly impacted Rio Tinto's bottom line. The company's Canadian smelters, which heavily rely on US buyers, have been particularly vulnerable to these tariff changes [1].

US aluminum price futures indicate rising costs for US buyers, and industry executives have expressed concerns about the potential suppression of US demand due to the increased costs [1]. Alcoa, the largest US aluminum producer, has also felt the sting of these tariffs, with Q2 costs reaching $115 million and predicting a sequential negative impact of around $90 million for Q3 2025 [1].

The broader context of Trump's trade policies includes an evolving metals tariff strategy that has caused significant disruption across global metals markets. The administration's metals tariff strategy has followed a clear pattern of escalation, including the implementation of blanket 25% import fees on steel and aluminum in March, an increase to 50% tariffs on both aluminum and steel imports in June, and an announcement of planned 50% tariffs on copper in mid-2025 [3].

The aluminum tariffs have created cascading impacts across multiple industries, with beverage companies like Constellation Brands projecting additional costs related to the tariffs. Supply chains throughout the aluminum value chain are adjusting to the "trade tumult" created by these rapid policy changes [3].

The impact of these tariffs on the broader economy remains a concern, with Rio Tinto warning that the costs are still feeding through to inflation and sentiment. The company's new CEO, Simon Trott, will take over on August 25, leading the company through this challenging period [2].

References:
[1] https://finance.yahoo.com/news/us-tariffs-canadian-aluminium-impact-113630914.html
[2] https://stocktwits.com/news-articles/markets/equity/rio-tinto-flags-300-m-cost-spike-due-to-trump-tariffs-on-canadian-aluminum/ch8h4QoR58v
[3] https://discoveryalert.com.au/news/us-tariffs-impact-rio-tinto-2025-aluminum-market/