US aluminum faces shutdowns and tariff pressures as Canada expands exports

In H1 2024, the main destinations for US aluminum exports were Malaysia, Mexico, Canada, India, and Thailand. By H1 2025, the top markets shifted to Japan - leading with 66,000 tonnes of unwrought aluminum alloy - followed by India, South Korea, Mexico, and Vietnam.

This sharp fall underscores a worsening crisis in the US aluminum industry, driven by a combination of factors such as smelter and refinery shutdowns, rising energy costs, and complex tariff-related trade barriers.

Smelters struggle to stay alive

In recent years, several US aluminum smelters and refining plants have either shut down or have curtailed operations, including major facilities such as the New Madrid smelter. These closures have resulted in the loss of nearly 30 per cent of the country's primary aluminum production capacity.

The root cause lies in escalating electricity costs, which are critical for aluminum smelting, a highly energy-intensive process. Rising power prices, combined with stricter environmental regulations, have made operations economically unviable for many producers.

Currently, the US operates a limited number of primary aluminum plants, many running below capacity. Specifically, Century Aluminum's Mt. Holly smelter in South Carolina has a production capacity of approximately 230,000 tonnes per year but has been operating at about 75 per cent capacity for the past three years. The plant has not run at full capacity since 2015. 

Century Aluminum has also announced plans to invest around USD 50 million to restart over 50,000 tonnes of idled production at Mt. Holly, aiming to bring it to full capacity by June 30, 2026. This restart is expected to increase US aluminum production by nearly 10 per cent and create over 100 new jobs.

 The Hawesville smelter in Kentucky, is in an idled state recently due to unsustainable power costs, and Century Aluminum is considering restarting or selling this plant by the end of September 2025

As for alumina refining, the US has only one remaining alumina refinery, Atlantic Alumina Company LLC (Atalco) located in Gramercy, Louisiana, which is facing severe environmental compliance pressures and trade policy challenges, further tightening the domestic supply of alumina.

US tariff policies backfire on competitiveness

Tariffs were supposed to protect US aluminum. First set at 25 per cent, then doubled to 50 per cent in June 2025 under the Trump administration. The idea? Give domestic producers a leg up.

The reality? It's costing them dearly. Tariffs drove up prices for key inputs like alumina and scrap. Between February and May 2025, US aluminum prices shot up 139 per cent compared to Europe. Margins are squeezed tight.

Industries that rely on aluminum - cars, planes - are feeling the pain. Higher costs, supply chain delays, production headaches. Some are even switching to other materials.

And the tariff net? Huge. More than 400 products now, from car parts to appliances. Canada, once a steady supplier, is shipping more to Europe and Asia instead of dealing with US tariffs.

Canada seizes the opportunity

While US producers fight for survival, Canada is thriving. Aluminum exports rose 2.6 per cent  in 2024, hitting 2.7 million tonnes to the US. That covers more than half of America's needs - worth about USD 11.6 billion. Rio Tinto alone shipped about 723,000 tonnes of primary aluminum to the US, accounting for nearly three-quarters of its Canadian output.

Canada's secret weapon is hydro power. Cheap, abundant, and clean. It keeps costs low and production green, ticking every sustainability box buyers want.

To mitigate the impact of rising US tariffs, Canada has also diversified its trade, redirecting some shipments to Europe and Asia. In addition to the US, which accounted for about CAD 15.7 billion in aluminum exports, Canada supplied Mexico (CAD 520 million), the Netherlands (CAD 211 million), Italy (CAD 109 million), and Malaysia (CAD 61 million), alongside emerging markets like the UK and Hong Kong. These strategies reinforce Canada's position as a leading, sustainable aluminum supplier to North America and global markets.

Industry at a critical juncture
 

The US aluminum industry is on thin ice. Plants are closing, costs are soaring, and policies meant to help are backfiring. Canada, meanwhile, is locking in its lead as the go-to supplier for North America and beyond.

For the US, the options are clear: cheaper, greener power, modern tech, and a hard look at trade rules. Without that, the gap with Canada won't just stay - it'll grow.