50%→25%! 22 Smelters Down to 4 — White House Bets on Tariff Halving to Secure Defense Aluminum Independence

The U.S. government announced on Monday (20th) that President Trump signed a proclamation adjusting the import tariff mechanism for primary aluminum under Section 232 of the Trade Expansion Act of 1962. Companies that build, expand, or renovate primary aluminum smelting facilities in the United States and receive Department of Commerce approval for a 'capacity return plan' will be eligible for an approximately 25% preferential tariff rate on annual imports equivalent to the expected annual output of the new project—half the current 50% rate.

According to the Financial Times, the U.S. Department of Commerce will oversee the review and supervision process. Applicants must commit to breaking ground by no later than January 20, 2029, and failure to comply could result in cancellation or even retroactive revocation of the preferential treatment.

The White House emphasized that primary aluminum is an irreplaceable material for strategic products such as armored vehicles, ships, spacecraft, and missiles. U.S. demand for primary aluminum has already exceeded domestic production capacity, leading to long-term reliance on imports from Canada and the Middle East.

Data from think tank SAFE shows that over the past 20 years, U.S. high-performance alloy raw material smelters have declined from 22 to just 4 facilities. It is estimated that by 2029, domestic production will meet only about one-quarter of domestic demand.

Jerry McGinn, Director of the Industrial Base Program at the Center for Strategic and International Studies (CSIS) in Washington and former U.S. Department of Defense procurement official, noted that this tariff reduction complements recent policies on 'sensitive materials' such as rare earth permanent magnets and critical minerals. At the same time, exemptions for defense companies sourcing from restricted origins like Russia are being tightened, requiring disclosure of sources and submission of a plan to reduce dependency.

Industry reactions are mixed. Century Aluminum and Emirates Global Aluminium (EGA) are jointly promoting a smelting project in Oklahoma, stating that the new system can alleviate investment pressure for expansion.

However, aerospace industry groups warn that certain critical minerals lack domestic sources in the U.S., and existing plants may struggle to meet demand in terms of both purity and scale.

Analysts widely believe that tariffs are merely a lever. The real constraints lie in electricity costs (accounting for 30–40% of aluminum production costs), billions of dollars in capital investment, environmental review approvals, and technical workforce shortages. In the short term, the persistently high Midwest aluminum premium is unlikely to ease.

This 'build-a-plant-for-lower-tariffs' directive from the Trump administration marks a shift from pure protectionism to 'conditional openness,' aiming to anchor capital within the reshoring chain of the defense industrial base.