Wedoany.com Report-Mar 13, President Donald Trump’s 25% tariffs on all steel and aluminium imported into the US took effect today, with likely cost hikes for construction, and a warning of 100,000 US jobs at risk in the aluminium sector alone.
Canada supplies more than half of all aluminium used in the US. Pictured is Alcan’s smelter in Kitimat, British Columbia
The S&P Homebuilders Select Industry Index, a sub-index of the S&P 1500, ended trading yesterday at 9,917 points, 17% down in the last three months, and 21% down from 25 November last year, the day after the US election.
While Canada is the biggest importer of steel to the US, its share is more evenly balanced among Brazil, Mexico and South Korea.
But the US is uniquely reliant on Canada for aluminium – or aluminum, as it’s spelled in North America – raising extra concern for an erstwhile friend of the US that Trump appears fixated on annexing.
More than half from Canada
Last year, the US consumed around 5 million metric tons of the metal, with more than half of that – 2.7 million metric tons – coming from Canada.
Domestic US production last year amounted to only 678,000 metric tons of the total consumed.
The UAE is the next biggest importer, sending 344,000 metric tons last year, followed by Argentina (165,000 tons), Bahrain (105,000), Australia (82,000), India (74,000), and Qatar (44,000), with a combined 63,000 tons coming from a range of other countries.
“The United States does not currently produce or recycle nearly enough aluminum domestically to meet demand,” US trade body the Aluminum Association warned last week.
Crucial for construction
Construction accounts for just over a fifth – 1.13 million tons – of aluminium used in the US every year, according to an August 2024 study published by the Aluminum Association.
It found that every $100,000 spent on residential and nonresidential construction led to 126 pounds and 183 pounds of aluminium being used, respectively.
Nonresidential construction made up more than 60% of the million tons used in construction in 2022, it found.
The study predicted construction demand for the metal would rise 9% between 2024 and 2027, with commercial windows and cladding the biggest demand driver, followed by solar installations and commercial doors.
It found the metal was taking market share away from wood in fencing and masonry in commercial cladding owing to aesthetic trends, longevity and ease of installation.
The study surveyed 200 architects and builders, finding that a majority of them favoured aluminium for its light weight, durability, and ability to meet compliance codes.
Risks ‘100,000 American jobs’
The chief executive of Alcoa, one of the biggest aluminium producers in the US, has warned that the latest tariffs could cost 100,000 jobs in the US.
Speaking at the BMO Global Metals and Mining conference last month, William Oplinger said they would “destroy about 20,000 direct US aluminum industry jobs and could result in 80,000 indirect jobs being eliminated in the US”, CNN reported.
“It’s bad for the US,” he added.
Although Alcoa is headquartered in Pittsburgh, a large proportion of its production is in Canada because energy is cheaper there and aluminium smelting is energy intensive.
Not easy coming home
One of Trump’s aims is to bring industry back to the US, but Oplinger said that was far from simple.
He said Alcoa had some unused domestic production capacity, but that it was a “very old, very inefficient capacity that has not been run in a number of years”.
Trumps own unpredictability was another barrier.
“One of the issues around the uncertainty of the tariffs is it’s very hard to make an investment decision even on something like a restart without knowing how long the tariffs will last,” he said.
“We make decisions around aluminum production that are a horizon of 20 to 40 years,” he added.
“We would not be making an investment in the United States based on a tariff structure that could be in place for a much shorter period of time.”
