Aluminum premium slips as U.S. set to cut tariffs on Canada metal
A key regional price benchmark for aluminum delivered to the U.S. market tumbled after Trump indicated he would lower tariffs. Read more.
The September Midwest aluminum premium in the United States fell sharply after officials signaled a possible reduction in tariffs on Canadian metal. Pricing service Platts reported that the premium for September deliveries dropped 8.2 percent to 95 cents per pound on Thursday. Contracts for October and November saw an even steeper slide, falling more than 12 percent once the tariff change was announced.
Premium as Cost Indicator
The Midwest premium represents the extra charge added to global aluminum benchmarks to cover transportation and handling for the region. It also serves as a barometer of the expense U.S. manufacturers incur when producing items such as household appliances, beverage cans and automobiles. When the premium rises, downstream product costs tend to follow.
Canadian Share and Tariff Outlook
Data from the U.S. Geological Survey shows that Canada supplies over half of the aluminum that enters the United States. Under the current Section 301 measures, many Canadian aluminum products face a 50 percent duty. Negotiators have indicated that a bilateral trade agreement could halve that rate to 25 percent for certain items, should the two countries reach a deal.
History of the Premium Surge
The premium began climbing toward record levels after President Donald Trump’s 50 percent tariff on Canadian aluminum took effect in June of last year. A separate supply shock linked to the conflict in Iran later pushed the regional premium up by nearly 100 percent, amplifying price pressures for U.S. producers.
Shifts in Trade Flows
Morgan Stanley analysts, led by Amy Gower, noted in a Thursday research note that Canadian exporters have redirected a larger share of their aluminum to European markets since the U.S. duties were imposed. The analysts argue that lowering the Canadian tariff to 25 percent would likely reverse some of that shift, encouraging more shipments to the United States. However, they caution that Canada alone cannot satisfy the full volume of U.S. demand, meaning the United States would still need to import additional aluminum subject to the existing 50 percent duty. That residual high‑tariff flow would temper any downward movement in the Midwest premium.
Pending Deal Details
The tentative agreement between Washington and Ottawa has not been finalized, and the terms are expected to vary by product category. Bloomberg, citing sources who asked to remain anonymous, reported that different tariff rates could apply to certain derivative products that incorporate aluminum or steel. Until the specifics are settled, the market will continue to gauge how the new rates might reshape supply patterns and pricing in the Midwest aluminum market.
Source: financialpost.com · 2026-08-21