Trump halves aluminum tariffs to 25% for smelter investors

President Trump signed an executive order July 20 cutting the aluminum import tariff to 25% from 50% for companies that invest in new U.S. smelters, aiming to more than double domestic primary aluminum output.

"President Trump is again prioritizing America first by making it easier to make investments like Oklahoma Primary Aluminum," said Jesse Gary, chief executive officer of Century Aluminum, which plans to build a 750,000-tonne smelter in Inola, Oklahoma.

The proclamation, issued under Section 232 of the Trade Expansion Act of 1962, authorizes the Commerce Department to approve "onshoring plans" from companies committing to build, expand or refurbish U.S. primary aluminum facilities by Jan. 20, 2029. Approved companies can import a volume of primary aluminum equal to their new facility's anticipated annual output at half the prevailing Section 232 rate — currently 25%, down from the standard 50%.

The policy addresses a critical supply gap: U.S. demand for primary aluminum, essential for defense systems including armored vehicles and naval vessels, far exceeds domestic smelting capacity. Century's Oklahoma project alone would add 750,000 tonnes of annual capacity, potentially more than doubling the nation's current output, while creating 1,000 direct jobs and 4,000 construction positions.

The current 50% tariff on primary aluminum imports follows two rounds of escalation this year — Proclamation 11021 in April and Proclamation 11032 in June — that doubled the rate from the original 10% level set under Proclamation 9704 of March 2018. The last time the administration used similar tariff leverage on aluminum, in 2018, domestic smelting capacity continued to decline as global oversupply kept prices below the breakeven point for many U.S. plants. U.S. primary aluminum production fell to about 860,000 tonnes in 2025 from a peak of 3.7 million tonnes in 2000, according to industry data.

Century Aluminum, which also announced an expansion at its Mt. Holly plant in South Carolina that will boost total U.S. primary aluminum output by 10% and add 150 jobs, is the first major beneficiary of the new framework. The company and Emirates Global Aluminum announced the Oklahoma project in February as the largest single investment ever in U.S. primary aluminum production. Century shares trade on the Nasdaq under ticker CENX.

The Commerce Department will monitor approved onshoring plans and can rescind tariff benefits retroactively if companies fail to meet their commitments, including in cases of fraud. The program mirrors a similar incentive structure established in October 2025 for certain aluminum and steel imports from Canada and Mexico under Proclamation 10984.

For the broader aluminum market, the policy creates a two-tier tariff system: companies investing domestically pay 25% on imports matching their new capacity, while non-investing importers continue paying 50%. This differential is designed to accelerate the reshoring of primary aluminum production, a sector that has shrunk dramatically since the early 2000s as U.S. smelters closed amid global oversupply. The next milestone will be whether other producers — including Alcoa Corp. and Novelis Inc. — submit onshoring plans to qualify for the reduced rate.

The aluminum tariff adjustment comes as the Trump administration continues using Section 232 authority to protect domestic industries deemed critical to national security. Since returning to office, the president has imposed or strengthened tariffs on steel, copper, trucks, automobiles, timber, lumber and pharmaceuticals, securing trillions in private and foreign investment commitments to bring manufacturing back to the United States, according to the White House fact sheet.

This article is for informational purposes only and does not constitute investment advice.