U.S. Aluminum Industry Eyes Revival as Tariffs Boost Smelter Production

In 2000, the U.S. was the largest aluminum-producing country in the world, comprising roughly 15% of global capacity, according to Hersh’s report.

At the time, 23 aluminum smelters were in operation across the U.S., but the vast majority have closed since then. The closures were driven by higher operational costs and industry globalization that made producers noncompetitive with cheaper, foreign imports subsidized by international governments, Hersh said.

Today, the U.S. produces just 1% of the world’s aluminum across four smelters owned by Alcoa and Century Aluminum.

“That’s a problem,” Hersh said during a discussion sponsored by the American Primary Aluminum Association. “And it’s even worse when we talk about the high-purity aluminum that is essential for so many things. It has very few substitutes in military hardware application, in energy and transportation systems, [and] other kinds of infrastructure.” 

Over the past 25 years, China added nearly 42 million metric tons of aluminum capacity, or 10 times more than what the U.S. could produce at its peak, according to the report. Countries in the Middle East, Southeast Asia, as well as Canada, have also added substantial capacity.

“This has created a huge global glut in supply, and that drives prices down,” Hersh said.

To mitigate this and make U.S. producers competitive again, the Trump administration increased Section 232 tariffs on steel, aluminum and copper imports from 25% to 50% last year. The administration then overhauled the tariffs in April to ensure they were assessed against the full customs value of the products rather than their metal content, which industry proponents say make the tariffs more effective.

As a result, aluminum and steel prices have surged and producers are reporting some of their strongest earnings quarters in years.

“Tariffs are a great policy tool when they’re used…narrowly, strategically to support key industries,” Hersh said. “But just like a hammer can be used to build a house, if you don’t use the tool correctly, bad things can happen. This one is a good thing.”

Despite primary aluminum price increases driven by Section 232, Hersh’s economic analysis showed that the tariffs have had little to no impact on consumer prices. Six of the 11 goods tested, including beer cans, wires and cables, construction materials and furniture, showed “zero effect” on input prices, according to the report.

Hersh said the reason for this is that even in the most intensive aluminum-using industries, “they’re using a very small share [of aluminum] in the overall structure of their costs of production.”

In short, he argued that the tariffs are working and bringing smelter production back to the U.S. In June, Century Aluminum reached 100% capacity at its Mt. Holly smelter in Goose Creek, South Carolina, after investing $50 million to restart idle production. The following month, Magnitude 7 Metals moved to restart its smelter in Marston, Missouri by the end of the year, after closing operations in 2024.

Smelters historically have been linked to poor air quality and energy issues. Before the Missouri smelter closed, air monitors showed the surrounding area exceeded the federal one-hour sulfur dioxide standard, NPR affiliate KBIA reported in July.

Century Aluminum and partner Emirates Global Aluminum are looking to build a $4 billion aluminum smelter in Inola, Oklahoma, marking the first one built in the U.S. since 1980. They inititally sought to begin construction on the smelter later this year.

However, the project has faced legal and environmental pushback from local residents and politicians. The Justice Department filed a statement supporting the project after Oklahoma Attorney General Gentner Drummond sued the companies, alleging environmental violations under state nuisance laws.

Most recently, the Tulsa Ports Board voted last week to authorize a lawsuit against Inola and any town officials that restricted industrial development at the Inola port, CBS-affiliate News 9 reported. The town adopted a moratorium on heavy industrial development and primary aluminum smelting through April 2027, the Oklahoma Voice reported.