How to Offset Trump's Aluminum Tariffs: Recycle Your Beer Can

Hindustan Times

7 hours ago

CASSOPOLIS, Mich.—The way around President Trump's 50% tariff on imported aluminum might be sitting in your garbage.
But Americans will have to do a lot more recycling, metals executives and analysts say, for the U.S. to break its reliance on imported aluminum. Even with such a high trade barrier, they give long odds to a domestic smelting revival.
'Recycling is the answer,' said Duncan Pitchford, who leads Norsk Hydro's upstream aluminum business in the U.S. 'The metal is already here.'
Duncan Pitchford leads Norsk Hydro's upstream aluminum business in the U.S., which includes three recycling plants.
U.S. primary aluminum production has dwindled over the past 25 years. Yet facilities like Hydro's two-year-old plant in southwest Michigan have made the country a leading producer of secondary aluminum from scrap, feeding metal to brewers, builders and automakers that are now burdened by the 50% import tax.
Building an aluminum smelter to make primary aluminum from refined bauxite would take several years and billions of dollars, never mind continuing electricity consumption that can rival that of a major U.S. city.
Aluminum-recycling plants can be built faster and cheaper—roughly two years and $150 million in the case of the Cassopolis plant. And since recycling facilities melt aluminum rather than cause a chemical reaction to create it, they consume about 5% of the energy needed for primary production, Pitchford said.
If the 14 remelt projects announced since 2022 are built and Americans significantly improve their recycling habits, the U.S. could reduce aluminum imports by as much as half, according to the Aluminum Association.
More than $1 billion worth of beverage cans were dumped in U.S. landfills just last year, the trade group estimates. By weight, that was similar to all the primary aluminum produced by U.S. smelters. A lack of sorting operations means that a lot of the aluminum in junked cars, demolition debris and old electronics winds up in landfills as well.
'If we get that back, it will be recycled,' said the Aluminum Association's Matt Meenan.
The U.S. also sends scrap abroad, exporting about 2.4 million metric tons of mostly lower-grade post-consumer aluminum last year. Recycling more of it stateside would be less expensive than continuing to fill the supply gap with imports now that there is a 50% tariff.
The import tax has lifted U.S. aluminum prices to a record relative to the global price set in London's trading pits. The benchmark Midwest premium has about tripled this year, reaching 72 cents a pound in August, according to S&P Global Commodity Insights. U.S. buyers pay that on top of the London Metal Exchange price, which was recently $1.18 a pound.
The added cost is walloping beverage companies and manufacturers. Brewer Molson Coors told investors earlier this month that it expected the greater premium to add $40 million to $55 million to its expenses this year. Ford Motor said $800 million of tariffs on imported parts, steel and aluminum helped wipe out its profit last quarter and that it expects a $2 billion hit to its annual earnings.
Automakers and other big aluminum users have yet to raise prices much in response. Analysts say it is a matter of time before the stockpiles of metal that arrived in the U.S. ahead of the June increase are depleted and companies start passing on higher aluminum costs.
'Without any relaxation of the tariffs, the situation for U.S. consumers may deteriorate in the second half of the year,' said Karen Norton, principal analyst at S&P Global.
In his first term, Trump set a 10% tariff on aluminum imports. His aim was to block cheap foreign aluminum so that domestic producers could take back market share and be available to meet demand from the military and infrastructure projects.
Upon returning to the White House this year, he raised the tariff to 25% and eliminated exemptions that had been given to big suppliers, including Mexico and Canada. Trump doubled the levy in June.
'At 25%, they can sort of get over that fence,' he said at a rally near Pittsburgh when he unveiled the higher tariff. 'At 50%, they can no longer get over the fence.'
The U.S. once dominated the aluminum business. The first commercial batch was made in Pittsburgh in 1888 by the company that became Alcoa. The U.S. remained the world's top producer through 2000. Smelters started closing around then, squeezed by cheaper Chinese and Russian exports and rising energy costs.
Electricity accounts for about 40% of the cost of making primary aluminum. Domestic smelters for decades were provided low-price hydropower from federal utilities, the Tennessee Valley Authority and the Northwest's Bonneville Power Administration. When those arrangements ended, smelters had to start paying market rates. Only four of the 24 smelters operating in 2000 are still running.
U.S. manufacturers came to rely on aluminum from Canada, where Quebec's cheap hydropower fuels smelters owned by Alcoa, Hydro and others. The tariff has Canadian smelters rerouting their output, while scrap, which isn't subject to Trump's tariff, is being shipped from Europe and piling up in the U.S.
About 15 million pounds of scrap arrive each month at Hydro's Michigan plant, mostly by truck. The Norwegian aluminum producer built its third U.S. recycling plant between big scrap markets in Chicago and Detroit.
Cassopolis is also in the middle of the largest concentration of aluminum extruders in the U.S., Pitchford said.
The extruders that make parts for Michigan's automakers and Indiana's RV manufacturers are the plant's main customers as well as diligent recyclers, returning their scrap to be melted into the next batch of malleable billets.
Other trucks arrive in Cassopolis full of shredded cars, old window and door frames and overhead electrical wire. The plant doesn't recycle cans, which go to facilities that specialize in turning the two alloys in beverage containers into new cans. Cassopolis specializes in producing automotive-crash alloys.
Among its state-of-the-art features is a delacquering furnace, which burns off impurities like paint, labels and dirt and enables the plant to recycle lower-grade scrap than most.
The Cassopolis plant specializes in producing automotive-crash alloys for car-part makers in Michigan and Indiana's RV manufacturers.
A lot of material comes through a sorting hub near Grand Rapids, where Hydro uses laser-induced breakdown spectroscopy technology to mechanically separate scrap by alloy. In Southeast Asia, where a lot of exported scrap is sent, different types of aluminum are separated by hand.
'We can't do that in the U.S.,' Pitchford said. 'We need hundreds of these machines around the country if we're going to meaningfully reduce scrap exports.'
Write to Ryan Dezember at [e-mail]
How to Offset Trump's Aluminum Tariffs: Recycle Your Beer Can
How to Offset Trump's Aluminum Tariffs: Recycle Your Beer Can
How to Offset Trump's Aluminum Tariffs: Recycle Your Beer Can