Findings show that U.S. tariff policy leaves the aluminum industry’s largest employment base exposed, even as primary aluminum tariff costs are passed on to extruders and fabricators.
WASHINGTON, D.C. — The Coalition for a Prosperous America (CPA) today released a new economic report, ‘Securing an American Aluminum Supply Chain: Why Downstream Tariff Coverage Is Essential.’ The report warns that the upcoming U.S.-Mexico-Canada Agreement (USMCA) review could undermine U.S. aluminum manufacturers if Canada and Mexico receive exemptions from downstream aluminum tariffs. Further, CPA calls on the U.S. Trade Representative (USTR) and Treasury Department to reject any such carve-outs.
The report finds that U.S. aluminum trade policy has focused heavily on primary smelting while leaving the industry’s largest employment and value-added base – downstream extruders and fabricators – without matching tariff protection. Because the United States is more than 80% import-reliant on primary aluminum, tariffs on primary metal flow into the U.S. “country premium” (commonly called the Midwest Premium). This raises input costs for downstream producers regardless of whether they import aluminum directly, or buy domestic billet. When imported downstream products such as extrusions, tubing, and fabricated goods do not face a matching tariff burden, U.S. manufacturers are left competing against foreign finished goods made with cheaper, tariff-free metal.
“Aluminum tariffs don’t stop at the smelter gate. Because the United States imports more than 80 percent of its primary aluminum, a tariff on primary metal flows straight into the U.S. country premium, and every extruder and fabricator in the country pays it – whether they buy imported aluminum or domestic billet,” said Andrew Rechenberg, CPA Senior Economist, and the author of this report. “If we raise tariffs on primary metal but leave downstream products exposed in the upcoming USMCA review, we protect a handful of smelters while exposing the workers who actually turn that metal into the products America builds with.”
The report documents that:
- Downstream extruders and fabricators account for roughly 78% of employment across the four core aluminum manufacturing categories – versus 22% for primary and secondary smelting – and up to 97% when broader downstream fabrication is included.
- Downstream producers also generate more than 75% of the U.S. aluminum industry’s $41.3 billion in 2021 earnings.
- Downstream producers also generate more than 75% of the U.S. aluminum industry’s $41.3 billion in 2021 earnings.
- Since the Section 232 aluminum tariff was doubled to 50% in June 2025, the U.S. country premium has risen sharply. The premium jumped 77% in just seven weeks after the tariff increase, climbed to a then-record 88.10¢/lb in November 2025, crossed $1.00/lb in January 2026, and peaked near 119¢/lb in May 2026.
- The premium alone now accounts for over 40% of the all-in transaction price of aluminum in the United States.
- The premium alone now accounts for over 40% of the all-in transaction price of aluminum in the United States.
- Even with the full 50% Section 232 tariff in place, a Mexican extruder can land product in the U.S. roughly $0.30/lb cheaper than a domestic extruder. If Mexico were exempted from the tariff, that gap would widen to $1.49/lb – a 38% cost advantage the report warns would be unsustainable for U.S. producers.
- The U.S. downstream trade surplus with Mexico is already eroding: the surplus in HTS 7604 (aluminum bars, rods, and profiles) fell 29% between 2016 and 2025, even without a tariff exemption in place.
- The U.S. downstream trade surplus with Mexico is already eroding: the surplus in HTS 7604 (aluminum bars, rods, and profiles) fell 29% between 2016 and 2025, even without a tariff exemption in place.
- Rebuilding U.S. primary aluminum capacity requires more than tariffs. The number of U.S. smelters has fallen from 33 in 1980 to just six today, and no new smelter has been built in 45 years.
- The report finds the binding constraint is electricity cost, and calls for long-term, globally competitive power contracts to bring curtailed capacity back online.
“The USMCA review will be a critical test of whether the administration’s aluminum tariffs actually protect American manufacturing or merely redirect imports through the agreement’s weakest link,” said Jon Toomey, President of CPA. “America’s downstream aluminum industry supports 125,675 jobs, including 65,662 jobs in sheet, plate, and extrusion. These workers produce critical components for our defense industrial base, energy infrastructure, transportation systems, and construction economy.”
“This is a strategically essential industry that the United States must protect,” continued Toomey. “Canada and Mexico should not get a backdoor to ship tariff-advantaged aluminum extrusions into the United States, while our own extruders pay tariff-loaded prices for their metal. Rules of origin are not a substitute for real tariff protection. Treasury and USTR should not treat them as one.”
CPA’s report recommends that the United States, in the USMCA review, implement the following:
- Maintain and raise downstream aluminum tariffs, at rates sufficient to offset the country-premium burden carried by U.S. extruders and fabricators.
- Reject all Canada and Mexico downstream tariff exemptions, including for extrusions, tubing, structures, and other fabricated aluminum goods.
- Treat rules of origin as an enforcement tool only, not a substitute for tariffs – requiring real-time, auditable verification of smelt, cast, and chain of custody rather than paper certifications.
- Pair downstream tariff protection with a primary aluminum power strategy, supporting long-term, competitively priced electricity contracts to restart curtailed smelter capacity.
CPA has repeatedly pressed policymakers to close loopholes that let foreign metal capture the benefit of U.S. trade policy.
This work includes a July joint white paper with the Aluminum Extruders Council urging Treasury to require U.S. extrusion for solar module frames to qualify for the Section 45Y/48E domestic content bonus. And previously, CPA shared its support for strong Foreign Entity of Concern (FEOC) protections in the ‘One Big Beautiful Bill’ legislation negotiations.
The full report is available here.
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