Aluminum Industry Explained: The U.S. View
Aluminum smelting runs on huge amounts of electricity, and the United States has let most of its smelters close. According to the USGS, three companies ran six primary smelters in 2025, two of them idle, and produced about 660,000 tons, against capacity of 1.31 million tons and world output of 74 million tons. Recycled scrap makes up much of U.S. supply, but primary metal mostly comes from Canada, and net import reliance was about 60%. Trade policy changed the price. A Section 232 tariff of 25% applied to all countries from March 2025 and doubled to 50% for most of them in June 2025. Buyers pay the London price plus a delivery premium, and that U.S. Midwest premium rose 55% between June 4 and December 31, 2025, then topped $1 a pound for the first time on January 23, 2026. The USGS estimates the U.S. market price averaged about $1.80 a pound in 2025, 39% higher than in 2024. Some smelter capacity is restarting, but not nearly enough to replace imports.
- Imports
- USGS: U.S. net import reliance for aluminum about 60% in 2025
- Tariff
- Section 232 aluminum tariff raised to 50% for most countries in June 2025
- Premium
- U.S. Midwest premium topped $1 a pound for the first time in January 2026
How the chain works
U.S. aluminum in 2024 and 2025 (USGS)
| 2024 | 2025 (estimated) | |
|---|---|---|
| Primary production | 676,000 tons | 660,000 tons |
| Imports of crude and semi-fabricated products | 4.84 million tons | 4.40 million tons |
| Apparent consumption | 5.83 million tons | 5.70 million tons |
| U.S. market price (average) | $1.30 per pound | $1.80 per pound |
| Net import reliance | 62% | 60% |
Why the U.S. makes so little primary aluminum
Making aluminum from alumina takes large, steady amounts of electricity, so smelters go where power is cheap. According to the USGS Mineral Commodity Summaries 2026, three companies operated six primary smelters in five states in 2025: two ran at full capacity, two at reduced capacity, and plants in Hawesville, Kentucky and New Madrid, Missouri have been idle since 2022 and 2024. U.S. capacity was 1.31 million tons and output about 660,000 tons. China alone produced about 45 million of the world's 74 million tons; Canada about 3.3 million.
Recycling fills much of the gap. U.S. plants recovered about 3.6 million tons of aluminum from scrap in 2025, and old scrap alone equaled about 28% of consumption. A 650,000-ton recycled flat-rolled mill in Mississippi shipped its first coils in June 2025.
Tariffs and the Midwest premium
In March 2025 the U.S. applied a 25% Section 232 tariff to aluminum and derivative products from all countries, ending earlier exemptions; in June it doubled to 50% for most countries, with the United Kingdom staying at 25%. In August more than 400 aluminum-containing product codes were added, taxed on their aluminum content.
U.S. buyers pay the London price plus the Midwest premium, which covers delivery and, since 2025, the tariff. Platts assessed the premium at 91.05 cents a pound on December 31, 2025, up 55% from June 4, and above $1 a pound for the first time on January 23, 2026. Canada supplied about 70% of U.S. aluminum imports in 2025, so the tariff on Canadian metal is the main driver.
Where U.S. aluminum goes
According to the USGS, transportation used 36% of U.S. aluminum in 2025, packaging such as beverage cans 24%, building 13%, electrical 9%, and consumer durables and machinery 8% each. Higher costs flow through to car parts, cans and construction products.
Some supply is coming back: in August 2025 plans were announced to restart more than 50,000 tons a year of idled capacity at a 229,000-ton smelter in South Carolina, with full output planned for mid-2026. Two aluminum sheet plants in Virginia and West Virginia closed in May and June 2025.
How the U.S. view differs from the China view
The Chinese version of this page looks at the world's dominant producer: China makes more than half the world's aluminum, a government cap on capacity limits growth, and power costs and bauxite imports from Guinea drive profits.
The U.S. problem is the reverse: too little smelting, high power costs and dependence on Canadian metal. U.S. tariffs raise prices for domestic users without quickly adding supply, which is why the Midwest premium, not the London price, is the number U.S. buyers watch.
2025–2026: the tariff premium
The U.S. raised its aluminum tariff to 25% in March 2025 and 50% in June.
Domestic smelters could not fill the gap quickly; primary output stayed around 660,000 tons. Buyers kept importing, mostly from Canada, and paid the tariff through a higher Midwest premium.
By January 2026 the premium had passed $1 a pound. The U.S. market price averaged about $1.80 a pound in 2025, 39% above 2024, while output barely changed.
- Tariffs on a metal the country cannot quickly produce raise prices more than output.
- The Midwest premium is the U.S.-specific price to watch.
- Restarting smelters depends on long-term power costs.
Common misreadings
MythThe tariff brought aluminum production back to the U.S.
RealityPrimary output was about 660,000 tons in 2025, slightly below 2024.
MythU.S. aluminum costs track the London price.
RealityThe Midwest premium alone topped $1 a pound in January 2026.
MythThe U.S. imports aluminum mainly from China.
RealityIn 2021–2024 Canada supplied 56% of imports and China 3%.
MythRecycling is a minor source.
RealityAbout 3.6 million tons was recovered from scrap in 2025, far more than primary output.
Tariffs, power and demand: scenarios
| Scenario | Main effect | How it passes through |
|---|---|---|
| Tariff on Canada cut | Midwest premium | Premium falls sharply |
| Tariff kept at 50% | U.S. buyers | Higher costs for cans, cars, buildings |
| Long-term cheap power deals | Idled smelters | More restarts |
| Auto production slows | Transport demand | Weaker sheet and extrusion orders |
| More recycling capacity | Scrap supply | Less need for primary imports |
| Power prices rise | U.S. smelters | Restarts delayed |
Supply and demand by segment
| Segment | Supply rigidity | Concentration | New demand | Policy role | What to watch |
|---|---|---|---|---|---|
| Primary smelting | Very high (power contracts) | High (three companies) | Low | High (tariffs) | Restarts |
| Imports | Low | High (Canada) | Low | Very high (Section 232) | Tariff changes |
| Recycling | Medium | Medium | Yes | Medium | Scrap supply |
| Rolling and extrusion | Medium | Medium | Low | Medium | Orders, premiums |
Supply rigidity: how long new capacity takes and whether money can speed it up. Concentration: whether output sits in a few countries or companies. The more rigid and concentrated, the more prone to shortages.
How to track it
| Indicator | What it tells you | Where to find it |
|---|---|---|
| U.S. Midwest premium | Tariff cost to U.S. buyers | Platts and Fastmarkets reports, news coverage |
| U.S. production, imports and stocks | Supply balance | USGS Mineral Industry Surveys, monthly, free |
| Tariff proclamations | Policy changes | Federal Register, free |
| Annual salient statistics | Big picture | USGS Mineral Commodity Summaries, free |
| Steel | The other Section 232 metal | U.S. view: steel |
Sources
- USGS: Mineral Commodity Summaries 2026, Aluminum
- Hellenic Shipping News citing Platts: US Midwest aluminum premium above $1/lb (2026-02-02)
Last updated 2026-10-18.