U.S. Steel and Aluminum Duties Hit the Factories That Use Them

Washington’s 50% duty on imported steel and aluminum is the going border charge, and U.S. factories are the ones paying it.

Pittsburgh-based Alcoa is sending more than $1 billion a year to U.S. Customs to bring in metal it smelts in Canada. The Midwest premium American buyers pay on top of the London Metal Exchange price is $1.09 a pound, so the duty is already in the price of sheet, cans, cars and beams.

How the 50% Steel and Aluminum Duty Works

On June 4, 2025, the United States doubled the steel and aluminum tariffs from 25% to 50% under Section 232 of the Trade Expansion Act of 1962, Export Development Canada notes, and that headline rate still governs core metal articles. A later order, Proclamation 11021 of April 2, 2026, made the charge bite harder by applying it to the full customs value of covered goods, not only the metal inside them, for entries from April 6, 2026.

President Donald Trump’s June 1, 2026 proclamation kept a 50 percent duty on metal products made of steel, aluminum or copper, with 25% on many derivative goods and a temporary 15% rate on a slice of farm machines, residential HVAC gear and industrial equipment through December 31, 2027. The same order cut the “made entirely” U.S. metal test from 95% to 85% by weight, which can qualify a product for a 10% rate.

Canada and Mexico did not get a clean exemption. For USMCA-qualifying goods in a listed industrial-equipment bucket, a 25% duty applies only to non-U.S. content, with a floor of 15% on the whole article. A Congressional Research Service brief finds that Section 232 tariffs apply to USMCA goods in the steel and aluminum regime, so a CUSMA sticker does not zero out the metal charge.

CURRENT SECTION 232 METAL RATES

Importers remit the duty when goods enter. They can swallow it, raise prices, switch mills or delay orders, and none of those moves is fast when a production slot is already booked.

Alcoa Pays More Than $1 Billion to Move Its Own Metal

The cleanest specimen is not a Canadian independent mill. It is Alcoa, which smelts about 900,000 tons of aluminum a year in Canada and ships most of that metal into the United States. Chief financial officer Molly Beerman told the Jefferies Global Industrials Conference in New York on September 10 that the company is paying more than $1 billion in tariffs on those tons.

ALCOA’S BORDER MATH

• Canadian output: About 900,000 tons of aluminum a year, most of it headed south.
• Duty bill: More than $1 billion a year at the 50% rate.
• U.S. import gap: The country needs about 4 million tons a year and Canada can supply 3 million, leaving 1 million tons that still have to come from somewhere else.
• Midwest premium: $1.09 a pound, or $2,403 a metric ton, down from a record $1.19 in June.

That premium is the surcharge U.S. buyers pay above the London Metal Exchange benchmark for physical metal. Beerman said it is covering the tariff and then some, because tons are tight and Alcoa’s value-add book is almost sold out for the rest of 2026.

With the U.S. still needing to incent the import of a million tons, even if we were to have a favorable rate with Canada, we don’t see Midwest dropping significantly. It might come off a little bit, but we wouldn’t see it returning to pre-tariff levels.

Molly Beerman, Chief Financial Officer, Alcoa, Jefferies Global Industrials Conference, New York

“However, the Midwest is fully compensating us for that, as well as returning as margin because of the tightness in tons,” she said. Halving the Canada rate would not collapse the premium, in her view, unless Japan, South Korea or Europe also got relief that covered the last million tons. In that case she expects the premium to fall and “wipe out the tariff benefit.”

Canada shipped $9.9 billion of aluminum to the United States in 2025, including $6.11 billion of unwrought metal, according to United Nations COMTRADE figures. Iron and steel added $5.61 billion. The duty sits on that flow, and a U.S. company with Canadian pots is writing a large share of the check.

The Invoice Lands in Detroit and on Jobsites

A passenger vehicle carries about 500 to 800 pounds of aluminum, more in an electric model, said Gerrit Reepmeyer, a partner in the automotive and industrial practice at AlixPartners. He put the aluminum cost increase from 2024 at over $1,000 per vehicle. Stephanie Brinley, principal automotive analyst at S&P Global Mobility, said automakers are already shifting some parts from aluminum back to steel because the metal is expensive and fuel-economy rules have eased.

Canada-built cars are a smaller slice of the U.S. market than they were before the metal and auto duties, but they are still in the mix. Bill Rinna, vice president, Americas, at GlobalData Automotive, said the Canada-sourced share of U.S. sales fell to 4% in the first half of 2026, from 7% for full-year 2024. Canada built about 1.2 million vehicles in 2025, and Toyota and Honda accounted for more than 75% of that output.

Even a truck assembled in the United States can pick up Canadian engines, transmissions, sheet or castings that have already crossed the border. Lenny LaRocca, who leads KPMG’s U.S. automotive practice, said some of those Canadian items have been hard to replace. On August 24, when President Trump threatened to take Canadian cars, trucks, auto parts and steel to 50% on January 1, 2027, Ford, General Motors and Stellantis shares fell while U.S. mill stocks rose.

WHO WRITES THE CHECK

• U.S. importers: They pay the duty at entry, then pass some or all of it down the chain.
• Automakers: Sheet, bar and 500 to 800 pounds of aluminum per vehicle show up in build cost, repairs and insurance.
• Builders and fabricators: Beams, columns, rebar and cladding move with the mill price, and project bids get recast.
• Can and machinery plants: Packaging, HVAC and farm equipment sit in the derivative buckets, where the rate is 25% or a temporary 15%.

Ryan Young, a senior economist at the Competitive Enterprise Institute, said jobs in steel-using industries outnumber mill jobs by 80 to 1, and that autos, construction and appliances pay more, then charge more. The political argument is about Ottawa. The payable is a U.S. customs entry.

South Korea Passed Canada as Top Foreign Supplier

U.S. mills wanted that entry to bite, and on volume it has. The American Iron and Steel Institute, using Census Bureau figures, said total steel imports were down 26.3% year to date through May 2026 versus 2025, with finished steel down 26.8%. Finished import market share was about 16% over those five months.

Canada used to be the default foreign mill. In May 2026 South Korea shipped 399,000 net tons, ahead of Brazil at 331,000 and Canada at 281,000. Over the 12 months from June 2025 through May 2026, Canada’s 12-month steel shipments fell 45% to 3,340,000 net tons, and Canada was still the largest supplier on that longer window.

U.S. STEEL IMPORTS BY SUPPLIER

Korea’s monthly lead is the part the national-security case did not advertise. A duty aimed at Canadian metal has opened space for a Pacific supplier, while U.S. users still pay the Midwest premium because the country cannot cover its own aluminum needs.

WHERE EXPERTS DISAGREE

• Mill case: Kevin Dempsey, president and CEO of the American Iron and Steel Institute, said the Section 232 steel tariffs should stay because steel is a national security asset, and he cited OECD estimates of 680 million metric tons of global overcapacity, heading toward 721 million by 2027.
• User case: Young said mill protection raises input bills for autos, construction and appliances, and those firms pass the cost to customers.
• Producer case: Beerman said the 50% rate is payable by Alcoa on its own Canadian tons, then recovered in the Midwest premium U.S. buyers already fund.

Dempsey put it this way in February: “Steel is not just a commodity, it is a national security asset.” Users answer with a different count of plants and pay packets.

Ottawa Matched 50% on $27.6 Billion of Goods

Canada’s first metal reply was a 25% surtax on certain U.S. steel and aluminum products from March 13, 2025. A Congressional Research Service brief says that from September 2025 Canada also charged 25% on C$15.6 billion (about $11 billion) of U.S. steel and aluminum. After talks broke off on August 21, 2026, and U.S. Section 338 duties of 50% took effect on August 22 on a separate list of Canadian goods, Ottawa went further.

The Department of Finance Canada said the United States had put a 50% tariff on $27.6 billion of Canadian goods, and that Canada would match U.S. tariffs dollar for dollar, rate for rate. From 12:01 a.m. on September 8, 2026, counter-tariffs of 15%, 25% and 50% applied to $27.6 billion of U.S. imports, with steel and aluminum that had been at 25% lifted to 50%. Furniture and apparel also sit at 50%. Appliances, cheese and some metal derivatives sit at 25%.

Finance Minister François-Philippe Champagne framed the list as a defence of workers and a way to put Canadian producers on a more even footing inside their home market. The package of new and expanded supports around the same fight is $7.5 billion, on top of nearly $25 billion since the U.S. duties began, Innovation Minister Anita Anand’s department said, including a $500 million liquidity stream at the Business Development Bank of Canada.

HOW THE 50% DUTY WAS BUILT

1. March 12, 2025: The United States imposes a 25% Section 232 duty on Canadian steel and aluminum.
2. March 13, 2025: Canada answers with 25% surtaxes on certain U.S. steel and aluminum products.
3. June 4, 2025: Washington doubles the metal duty to 50%.
4. April 6, 2026: Duties apply to full customs value, not only metal content.
5. June 8, 2026: Selected machines get lower temporary rates, and listed USMCA goods get the non-U.S. content rule.
6. August 22, 2026: Section 338 adds 50% duties on a separate list of Canadian goods after a three-day pause.
7. September 8, 2026: Canada matches with 15%, 25% and 50% duties on $27.6 billion of U.S. goods, lifting steel and aluminum to 50%.
8. September 15, 2026: Section 338 duties stack on top of Section 232 for listed metal products.

The August talks that collapsed would have cut the top-line tariff on Canadian cars and light trucks from 25% to 15%, according to auto-industry briefings after the break. Metal relief in that round never landed. Buyers who waited for a 25% Canada rate are still looking at 50% on core tons, plus Ottawa’s mirror on the way back.

Combined Duties Reach 75% on Some Canadian Metal

The next turn is not another doubling of the 232 rate. It is stacking. On September 8, 2026, the White House issued five proclamations under Section 338 of the Tariff Act of 1930. Three of them ban specified Canadian packaged alcohol, some dairy products and large-displacement motorcycles from September 29. Two others change the 50% Section 338 lists from September 15 and, in a shift from the July orders, let those duties apply in addition to Section 232.

On aluminum profiles, bars, rods, tubes and pipes newly pulled into the motor-vehicle list, and on iron and steel structures, columns and beams, that math is 25% Section 232 plus 50% Section 338, or combined extra duties of 75%, on top of the ordinary most-favoured-nation rate. USMCA origin does not wipe out Section 338, because the implementing statute says no USMCA term that conflicts with U.S. law has effect. Goods already on the water but not yet entered by September 29 stay at the 50% duty rather than the ban, which is a short window, not a carve-out.

A short fight delays orders. A long one changes suppliers, plant maps and the premium that every U.S. buyer of physical aluminum already funds. Beerman’s order book is sold through 2026 at $1.09 a pound over LME. From September 15, some of the same cross-border shapes also face the stacked 50% Section 338 charge, and the mills, the smelters and the factories will settle that on the entry summary, not in a podium line about Ottawa.