What Really Changed for Alcoa after Trump’s Tariffs?



Trump’s tariffs

The Section 232 tariffs were President Trump’s first move in the trade war. Since then, President Trump imposed tariffs on $250 billion worth of Chinese goods.

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Demand slowdown

The US-China trade war and the general slowdown in China’s aluminum demand have taken a toll on aluminum prices, which hurt aluminum producers’ earnings. The only saving grace for US aluminum producers has been the increase in US physical aluminum premiums, which helped offset the negative impact from lower aluminum prices (RIO). The fall in aluminum, which is now trading below $2,000 per metric ton, hasn’t been fully offset by higher premiums. US aluminum producers are getting a lower amount for their products compared to what they were getting before the tariffs. Currently, Alcoa (AA) is paying tariffs on the aluminum that it ships from its Canadian smelters to the US (SPY).


There have been some smelter restarts in the United States after the tariffs. Century Aluminum (CENX) announced the restart of its Hawesville smelter after President Trump announced the tariffs. However, even Century Aluminum’s earnings have taken a hit this year. Alumina prices (AWC) hit a multiyear high amid supply-side disruptions. Although higher alumina prices boosted Alcoa’s earnings in the last few quarters, the windfall might not persist next year. Alumina prices have fallen sharply from their peak.

While US aluminum producers haven’t really benefited from the tariffs, downstream users have also been impacted negatively.


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