At the Jefferies Global Industrials Conference in New York, Alcoa Chief Financial Officer Molly Beerman warned that a reduction of the 50% tariff on Canadian aluminum would only modestly affect the Midwest premium – the extra cost U.S. buyers pay over the London Metal Exchange price. The premium, currently $1.09 per pound ($2,403 per metric ton), remains elevated despite a recent dip from a record $1.19 per pound in June.
Why the premium persists
Beerman noted that the United States imports roughly 4 million tons of aluminum each year, while Canada can supply only about 3 million tons. “With the U.S. still needing to import a million tons, even if we were to have a favorable rate with Canada, we don’t see the Midwest premium dropping significantly,” she said. “It might come off a little bit, but we wouldn’t see it returning to pre‑tariff levels.”
Broader trade relief needed
The CFO added that meaningful relief would require tariff reductions or waivers for other major suppliers such as Japan, South Korea, and Europe. If those partners were able to cover the remaining million tons, the premium could begin to shrink, she explained.
Alcoa’s cost structure and market position
Alcoa, headquartered in Pittsburgh, produces about 900,000 tons of aluminum per year in Canada and currently pays more than $1 billion in tariffs to bring that metal into the United States. “The Midwest premium is fully compensating us for those tariffs, as well as returning margin because of the tightness in supply,” Beerman said.
With supply from the war‑torn Middle East constrained, North American and European customers are actively seeking Alcoa’s product. The company’s order book is “almost completely sold out for the rest of 2026,” indicating strong demand despite the cost pressures.
Implications for U.S. manufacturers and consumers
For U.S. manufacturers that rely on aluminum – from automotive to construction – the premium adds a noticeable cost layer. While a tariff cut on Canadian imports would provide some relief, the broader need for diversified supply sources means policymakers must consider a more comprehensive trade approach.
Beerman’s comments come as the Trump administration continues to evaluate trade policies aimed at protecting American industry while keeping costs manageable for consumers. The administration has emphasized the importance of fair trade practices and has signaled openness to negotiating tariff adjustments with multiple partners.
Looking ahead
Alcoa’s outlook suggests that without broader tariff relief, the Midwest premium will likely stay above pre‑tariff levels for the foreseeable future. Stakeholders in the aluminum market – from producers to end‑users – will be watching upcoming trade negotiations closely, hoping for a balanced solution that supports domestic manufacturing without imposing excessive costs.
Original reporting: Appleton, WI News Feed (HLL/CB) — read the source article.
