Clark Packard and Alfredo Carrillo Obregon
Recently, the American Primary Aluminum Association issued a report claiming as proof that the 50 percent Section 232 “national security” tariffs should stay in place. Some of the report withstands scrutiny. High-purity aluminum matters for military hardware, and the report notes that no smelter in the United States or any NATO country can make it (p. 2). Aluminum also makes up a small share of costs for most finished goods, so the per-unit price effects are relatively modest. The defensible version of this argument is a very narrow, national security case. Yet the report does not make the case. Three problems stand out.
Are the Tariffs Working? The Report Can’t Say
The report lays out a simple test: tariffs should raise aluminum prices and spur investment, and “If they do not, they are not working” (p. 16). At the same time, the report waves away the costs and argues that the tariffs’ price effect is small. It says the tariff shows up only in the Midwest Premium, the US delivery premium on top of the London Metal Exchange (p. 3), but also that the premium tracks global conditions rather than tariff coverage—and the recent spike predates the 2025 tariff escalation (p. 16).
Both can’t be true. If the premium spike is the tariff, then the 50 percent price shock the report simulates isn’t the overstatement it claims; it’s roughly what buyers actually faced. Table A2 of the report shows aluminum producer prices up 48.5 percent from February 2025 to August 2026—the period during which tariffs increased dramatically. If the spike isn’t the result of the tariff, then by the report’s own test, the tariffs aren’t working.
On a more fundamental level, the report’s framing of the Section 232 aluminum tariffs as a means to price in the “negative externality” of reliance on imported aluminum (pp. 5, 8) inaccurately portrays the role of the duties. Even assuming that import reliance is a negative externality—a debatable proposition, given that overreliance on highly concentrated domestic production creates similar vulnerabilities—it does not follow that the socially optimal price equals the costs of production in the United States, which are elevated by factors such as high electricity prices. (Interestingly, the report does not assess the degree to which non-trade factors have contributed to the decline in aluminum production in the United States and instead solely focuses on the role of imports.)
Making imports so expensive as to make domestic production viable does not equate to adding a “national resilience” premium: it simply protects less cost-efficient domestic companies.
Regardless, output has not increased despite higher prices. The report puts 2025 US primary production at about 670,000 tons, or 10 percent below 2017, when capacity utilization had sunk to 40 percent (pp. 14–15). After the 2018 “national security” tariffs on aluminum, utilization rose only to 61 percent, which is far short of the 80 percent the report says the industry needs. Some of the restarts are genuine—Century’s Mt. Holly smelter in Goose Creek, South Carolina—but the “working” claim rests mostly on a table of announcements (p. 21), and announced is not the same as built.
A centerpiece of the report’s claim is a planned $4 billion smelter in Oklahoma, which the report says would more than double US primary output and restore high-purity domestic capacity (pp. 6, 20–21). The project is a joint venture between Emirates Global Aluminum and Century Aluminum, based in South Carolina. The report notes that the project depends on a federal grant of up to $500 million (p. 6), not just tariff-induced price increases. The developers do not expect production until the end of 2029. Likewise, the project faces scrutiny from local residents and the state’s attorney general.
Likewise, the Trump administration does not seem to believe the tariff alone is enough. In July, the White House issued a proclamation that primary aluminum is “still in insufficient supply” and created a carveout: companies whose smelter plans are approved by Commerce can import primary aluminum up to their planned output at half the Section 232 50 percent tariff rate. Century told investors it expects to qualify and plans to use the tariff discount to help fund its share of the smelter. The Aluminum Association’s report, published three months later, suggests policymakers keep the tariffs at their current rates and then eliminate “all exclusions and exemptions” (p. 4). The report never mentions this preferential program. Carve-outs, it seems, are a problem only when aluminum users get them.
A Narrow Threat, A Blunt Instrument
The report identifies a specific security problem: no domestic or allied capacity to produce the high-purity aluminum needed for military use, leaving the United States reliant on China, Russia, and the UAE (pp. 2, 5). The remedy is not 50 percent tariffs on aluminum from every country with no exclusions or exemptions, plus derivative products.
That hits Canada hardest, which, as the report notes, supplies about two-thirds of aluminum imports (p. 11). Canada is a NATO ally—not one of the report’s risky suppliers—and by federal law literally part of the US defense industrial base. As the Wall Street Journal noted this week, Washington paid up front for a Quebec aluminum smelter during World War II, helping finance smelters that fed America’s aircraft buildup. The tariff hits canned beer, energy, communications cable, office furniture, and construction inputs—the very goods the report tests (p.18), which have very little to do with fighter jets.
Likewise, tariffs are pushing Canada’s metal further away. Canadian shipments of unwrought aluminum to the United States fell by about 25 percent in 2025 as producers redirected the metal to Europe—Canada’s shipments to Europe were up another 77 percent through August of this year. American buyers filled part of the gap with purchases from the Persian Gulf: the UAE and Bahrain supplied 23 percent of unwrought aluminum imports in 2025, up from 16 percent in 2024. The Aluminum Association’s report identifies the UAE as one of the three “highly precarious” sources (p. 2), and notes that Gulf shipments were disrupted by the war in Iran. In other words, a tariff sold as insurance against supply chain disruption has pushed American buyers away from a NATO ally—and a country literally considered part of the US industrial base—toward one of the very suppliers the report flags as a risk.
Moreover, the report never estimates how much high-purity metal the military needs and never weighs narrower tools: stockpiles, long-term defense contracts, or targeted support for high-purity capacity. Back when the Department of Commerce conducted the original Section 232 aluminum investigation in 2017, former Secretary of Defense Jim Mattis assessed that the US military only needed “about three percent” of US aluminum production and that the report’s assessment that unfair trade practices eroded the US manufacturing industrial base did not “impact the ability of DoD programs to acquire the […] aluminum necessary to meet national defense requirements.” An updated assessment of actual US military needs and the industry’s ability to supply them would help elevate the debate on the aluminum tariffs. The American Primary Aluminum Association’s report, despite referencing the importance of aluminum for US military applications, does not provide much precise information that can help us determine whether Mattis’s assessment holds or if the situation has changed in the years since his memorandum.
Ironically, the report references the possibility that “defense needs crowd out nondefense uses and disrupt production chains in other sectors essential to economic activity and governance” (p. 5). Should US capacity be oriented strictly toward military purposes, imports—particularly from a geographically proximate and trusted trading partner like Canada—could be relied upon precisely to fill in the gap between domestic output and demand. Yet, treating imports from Canada as a liability rather than an asset leads the report to propose the more costly approach of onshoring the industry via protectionism.
The Costs Are Conceded But Never Added Up
The report admits the tariffs cost something, citing a (non-publicly available) consultancy estimate of $135 per new car and two cents per beer can (pp. 4, 18). But it presents those costs as slivers of retail prices and never bothers to note the volumes.
If we take the report at its word that the tariff lives within the Midwest Premium, it is worth noting that the premium hit 90 cents a pound in December 2025, almost four times its level a year earlier, and topped $1 in January 2026. That is an increase of about $1,500 per metric ton. Domestic primary output plus imports of crude and semi-fabricated came to about 5 million tons in 2025. Multiply that, and American buyers are paying around $7.5 billion more a year. That is a rough figure, but it is arithmetic that the report does not bother to calculate. Against roughly 3,600 production jobs, the report credits announced projects, that is, about $2 million per job, per year.
Likewise, the report does not attempt to fully flesh out the pass-through costs. Table A2 shows aluminum producer prices up 48.5 percent while wire and cable prices fell by 5.4 percent and canned beer fell by 0.5 percent (p. 22). Yet when input costs jump, and output prices do not, someone has to eat the difference: downstream manufacturers whose margins the report never bothers to examine.
The aluminum industry is on firmer ground when it tells a narrow story about high-purity metal and national defense. The report tells a different story, which its own tables do not support.