Alcoa CEO warns tariffs will destroy metal demand as prices rise

The head of the largest US aluminum producer warns import tariffs will destroy demand for American metal, contrary to the Trump administration’s claim duties will revitalize the domestic industry.

Prices now are significantly higher in the US due to President Donald Trump’s 50% tariff on aluminum imports, Alcoa Corp. chief executive officer Bill Oplinger said in an interview Monday. Without changes, American customers or shareholders ultimately will pay that higher price, he said.

Oplinger’s comments are an escalation of his remarks in January when he said tariffs would have a “quieting effect” on demand. Trump set 25% import duties on aluminum in March and doubled them in June, saying tariffs are necessary to protect the American industry and revitalize production. Oplinger said the rate has left Alcoa with an annual tariff expense of about $850 million.

“It’s hard to envision a situation where aluminum is systematically 50% more in the US without some type of demand destruction,” Oplinger said, adding he has been on a campaign with Washington and governments around the world about the impact of the tariffs.

Oplinger said buyers had been shipping aluminum into the US before Trump raised tariffs, but consumers have worked through that inventory and are shipping metal in from Canada and elsewhere. Alcoa’s order books in the US remain strong, Oplinger said, and so-called premiums have risen to cover the tariffs.

The warning from the preeminent US aluminum producer highlights long-held concerns over the tariffs. Higher prices for the metal — used in everything from window frames to Ford F-150 trucks — significantly impact construction costs. Economists fear inflation eventually will curb consumer appetites.

Shares of Alcoa are down more than 17% year-to-date, as aluminum demand in the US remains lackluster. The metal has been weighed down by a sharp decline in US exports and a reduction in industrial uses.

(By Joe Deaux)