U.S. tariffs on Canadian aluminum remain a key risk for North America’s largest producers, with current levies as high as 50% on shipments exceeding quota limits. A potential reduction to 25% could improve profitability for companies such as Rio Tinto, Alcoa, and Teck Resources, according to Deutsche Bank estimates. The bank projects that EBITDA for Rio Tinto and Alcoa would rise by roughly 3% if tariffs were halved.
Alcoa’s shares fell 4% after reports suggested the U.S. might scale back the tariffs, which have historically shielded domestic smelters from cheaper Canadian imports. The move follows Canada’s extension of steel and aluminum tariff quotas for non-CUSMA nations through June 2027, maintaining pressure on cross-border trade dynamics. Imports exceeding quota thresholds still face full penalty tariffs, limiting competitive advantages for Canadian producers.
Lower tariffs would reduce the U.S. Midwest premium—a key benchmark for aluminum pricing—boosting the relative attractiveness of Canadian supply. Deutsche Bank estimates Alcoa’s revenue could grow 15.6% next year, while Rio Tinto’s is forecast at 8.3%. The bank’s analysis highlights the sensitivity of these producers to trade policy shifts, particularly in the Midwest market where Canadian aluminum competes directly with U.S. smelters.
Rio Tinto and Alcoa operate vertically integrated supply chains with low production costs and global reach, positioning them to benefit from improved trade conditions. Rio Tinto is also advancing a gallium extraction project in Quebec, backed by government funding, as part of its broader strategy to diversify revenue streams amid volatile commodity markets. Teck Resources, with an EBITDA margin of 46.9% and a 116.6% one-year return, remains the highest-performing among the three in recent performance metrics.
Canada has been advocating for the renewal of the CUSMA trade agreement to secure long-term stability in cross-border metals trade. The agreement’s provisions have historically shaped tariff structures and quota systems affecting North American aluminum supply chains. Analysts note that any easing of U.S. tariffs could further tighten the market balance, particularly in regions where Canadian smelters supply a significant share of regional demand.
