Published
December 17, 2025
The new tariffs imposed this year have thrown a wrench in the gears of U.S. manufacturing (as discussed in Part 1 and Part 2). A good case in point is the 50% tariff imposed on imported aluminum—including from Canada, long the largest source of U.S. aluminum imports.
Imports account for about 56% of all the aluminum used in the United States, and about 70% of U.S. aluminum imports come from Canada. This isn’t new: U.S. aluminum producers began investing heavily in hydropower-rich Quebec a century ago, and Canada eventually provided 40% of all the Allied production of aluminum during World War II.
Why are these tariffs harmful?
- “Congealed Electricity” is an old nickname for aluminum because electricity represents almost 40% of the cost of its production. Meanwhile, electricity in the United States is expensive and getting more so: Electricity prices have risen about 40% in the past five years.
- Supply Side Constraints: Shifting to entirely domestic production of aluminum isn’t economically feasible at a time when U.S. electricity demand is rising significantly. The constraints on expanding U.S. electricity production are already substantial—from shortages of turbines and transformers to basic inputs such as electrical steel, not to mention badly needed grid investments.
- Bigger than Nevada: Adding to these power demands isn’t just costly; it would take decades. Replacing aluminum imports with domestic production would require new electricity generation equivalent to that of the entire state of Nevada.
Against that backdrop, the chance to import competitively-priced aluminum from Canada—made with its abundant hydropower—is just one more example of the benefits of the U.S.-Canada trade partnership:
- Biggest Market: Americans have benefited immensely from trade with Canada, which is the largest U.S. export market in the world, including for U.S. manufactured goods. In fact, the U.S. has a significant manufactured goods trade surplus with Canada.
- Barrier Free Trade: Canada eliminated tariffs on 99% of U.S. exports under the 1988 U.S.-Canada Free Trade Agreement, which the USMCA has maintained.
- Major Ally: Canada is more than just another trade partner. It’s a major NATO ally, and Congress declared Canada an integral part of the U.S. defense industrial base under the Defense Production Act in 1993.
The U.S.-Canada trade partnership is a win-win—in ways that go well beyond aluminum. Which is also why the United States should end its tariffs on Canadian aluminum.
DIG DEEPER: More on tariffs
Parts 1 and 2 of this Series
Coming Soon: “Inclusions” that Exclude Growth and Jobs
About the author
John G. Murphy
John Murphy directs the U.S. Chamber’s advocacy relating to international trade and investment policy and regularly represents the Chamber before Congress, the administration, foreign governments, and the World Trade Organization.
