Cost of "Trump Tariffs": Historic Breakthrough in US aluminum premium, doubling in price to $1 per pound in six months

The US aluminum market is experiencing a historic moment as the US aluminum premium assessed by S&P Global Commodity Insights has surpassed $1 per pound for the first time, closing at $1.0095. This marks a new high for the spot aluminum trading cost in the US, with the premium doubling in just six months. As a core component of the total cost of industrial aluminum in the US, in addition to the London Metal Exchange (LME) benchmark price, this premium surge directly reflects the intense market volatility caused by the Trump administration increasing aluminum import tariffs from 25% to 50% in June 2025. The pressure of tariff costs being passed on to end users has reached its peak, becoming a decisive force in driving up the premium. The US aluminum premium is the regional trading price of aluminum in the Midwest region of the US. It is an additional cost added on top of the global LME aluminum benchmark price to reflect the specific conditions of the local market. With around 70% of primary aluminum imports in the US heavily reliant on Canada, and no tax exemption agreement reached between the two countries, the tariff cost per ton of aluminum has soared to over $1425. This structural cost shift has forced spot suppliers to raise the premium to cover the tax burden. At the same time, extreme scarcity on the supply side has exacerbated price fluctuations, while trade policy uncertainty has led to reduced replenishment willingness among importers, resulting in historically low domestic spot inventories in the US. Traders generally reflect that although international aluminum prices on the LME are relatively stable, the premium part of purchasing physical metal in the US accounts for nearly 40% of the total procurement costs. According to the latest data from Fastmarkets, the US Midwest aluminum premium surged to $1.005 per pound on Wednesday, hitting a new high. This increase has continued the strong performance since early June - when the Trump administration's 50% tariff on aluminum imports took effect, pushing the premium above 64 cents for the first time. Since June, the premium has continuously broken previous high points, with a cumulative increase of over 100%, forming a rare continuous upward trend. Due to the tariffs, for most of the past year, the US aluminum price has risen faster than the international aluminum price. This extreme pricing environment has also had a negative impact on the US economy, with downstream industries such as automotive manufacturing, aerospace, and construction packaging facing profitability challenges. As the total aluminum price surpasses $5200 per ton, many companies relying on long-term contracts have found that the actual payment costs far exceed their budgets, with some factories forced to reduce production due to raw material shortages or cost inversions.