Amended Section 232 tariffs aim to boost domestic smelting but won’t resolve import reliance or near-term supply shortages, ING analysis shows.
Washington’s revised Section 232 aluminium tariffs offer a 25% rate for firms investing in US smelting capacity, down from 50%, but the policy shift is unlikely to curb elevated Midwest premiums. The US remains heavily dependent on imports, with primary output declining for decades despite tariff protection.
US primary aluminium production has fallen to just four operating smelters, down from over 20 in the early 2000s. Canada and Middle Eastern producers dominate supply, filling the gap left by domestic shortfalls. New smelting capacity requires years of planning and billions in capital, with competitively priced electricity a critical hurdle.
The tariff adjustments may improve investment incentives on paper, but structural challenges persist. Without rapid capacity expansion, the US will continue relying on imports, keeping Midwest premiums supported.