One year after the United States imposed 50% tariffs on imported aluminium and steel, the consequences are becoming increasingly visible among the country’s largest aluminium consumers. Rising raw material costs have increased pressure on the construction, automotive and packaging sectors, while some companies are actively seeking alternatives to aluminium.
The tariffs, which took effect on June 4, 2025, have contributed to record-high aluminium prices in the US market. At the same time, imports from Canada, the country's largest aluminium supplier, have declined significantly, tightening supply conditions.
Demand Holds Up Despite Market Uncertainty
Despite market disruptions, North American aluminium demand increased by 0.8% during 2025, according to the Aluminium Association.
Transportation remained the largest aluminium-consuming sector in the United States, accounting for 36% of total consumption. Packaging represented 24%, while construction accounted for 13%, according to data from the US Geological Survey.
Industry representatives nevertheless describe market conditions as weaker than normal.
Charles Johnson, President and CEO of the Aluminium Association, said demand growth remained positive but modest, reflecting uncertainty and significant market disruptions.
Construction Projects Face Economic Challenges
The sharp increase in aluminium prices has particularly affected the construction industry, where many projects are becoming increasingly difficult to justify economically.
Anirban Basu, Chief Economist at the Associated Builders and Contractors, argues that tariffs are contributing to inflationary pressures while reducing the likelihood that planned investments will move forward.
High interest rates continue to weigh on the sector as well.
Despite these challenges, demand remains strong for office buildings, hotels and logistics facilities. Data centres have emerged as one of the few rapidly expanding segments of the construction market.
According to the Associated General Contractors of America, data centres accounted for 6.8% of US private non-residential construction spending in March. The segment remains one of the few construction categories still delivering double-digit growth.
Automakers Turn to Steel
The automotive sector is also facing higher aluminium-related costs.
A modern passenger vehicle typically contains between 225 and 360 kilograms of aluminium, while electric vehicles often use even larger volumes. Consulting firm AlixPartners estimates that aluminium price increases since 2024 have added more than $1,000 in material costs per vehicle.
As a result, several automakers have begun replacing aluminium with steel in selected components.
According to analysts at S&P Global Mobility, the combination of higher aluminium costs and less stringent fuel-economy requirements has reduced incentives to maximise aluminium use for lightweight vehicle designs.
The sector has also been affected by production disruptions at Novelis’ major aluminium facility in Oswego, New York, following fires in late 2025.
Consumer Goods Companies Absorb Higher Costs
Many consumer goods manufacturers are attempting to avoid passing increased costs on to consumers.
The Consumer Brands Association, which represents companies including PepsiCo and Procter & Gamble, says members are focusing on efficiency improvements, supply-chain modernisation and digitalisation efforts to limit price increases.
At the same time, the organisation warns that aluminium tariffs could create a competitive disadvantage for US manufacturers. If domestic input costs continue to rise while imported finished products remain comparatively competitive, foreign producers could gain market share.
One year after the tariffs were introduced, debate continues over whether the benefits for domestic metal producers outweigh the growing costs faced by industries that depend on aluminium as a key manufacturing input.
Source: S&P Global Commodity Insights, Aluminium Association, Associated Builders and Contractors, Associated General Contractors of America, Brewers Association, AlixPartners.
Fact Check:
The US aluminium and steel tariffs were introduced as part of a broader industrial policy aimed at strengthening domestic production and reducing dependence on imports. However, several US industry groups have argued that higher raw material costs could weaken the competitiveness of downstream manufacturers, particularly those that rely heavily on imported aluminium. As a result, the economic impact of the tariffs differs significantly between metal producers and companies that use aluminium as an input material.
