Aluminium: Tariff tweaks seen as long-term policy – ING

ING analysts discuss changes to US Section 232 aluminium tariffs aimed at incentivizing domestic smelting investment. Qualifying projects can import at 25% instead of 50%, but ING stresses this is a long-term industrial policy with limited near-term impact. They note US primary aluminium output has shrunk to four smelters, leaving the market structurally reliant on imports and supporting Midwest premiums.

US market stays structurally import-reliant

"In base metals, the Trump administration amended its Section 232 aluminium tariffs to encourage investment in domestic smelting. Companies that build, expand or refurbish US smelting capacity can apply to import qualifying volumes at a 25% tariff instead of the standard 50% rate."

"US primary aluminium production continued to decline over the years despite years of tariff protection. The country now has only four operating primary aluminium smelters."

"However, the latest changes are unlikely to materially alter the near-term US market. The programme should be viewed as a long-term industrial policy rather than a near-term solution to the country’s supply shortfall."

"If successful, it could support a gradual revival of US primary aluminium production. Until meaningful new capacity comes online, the US will remain structurally dependent on imports, keeping Midwest premiums well supported."

(This article was created with the help of an Artificial Intelligence tool and reviewed by an editor. Know more.)