Alcoa (AA, Financial), the largest aluminum producer in the U.S., is experiencing significant financial losses due to the tariffs imposed by the U.S. government on aluminum imports. Since the implementation of a 25% tariff on Canadian aluminum, Alcoa reported a loss of approximately $20 million in the first quarter. The company anticipates the losses to escalate to around $90 million in the current quarter.
Alcoa's CEO, William Oplinger, highlighted that 70% of the aluminum produced in Canada is exported to the U.S., now subject to the hefty tariff. Additionally, Alcoa relies on raw materials from Chinese suppliers. The tariffs on Chinese imports are expected to increase the company's annual costs by $10 million to $15 million due to the lack of alternative suppliers.
The tariffs aim to boost U.S. aluminum production, which has significantly declined over the years. Despite potential reactivation of idle smelting capacities, the U.S. still faces an aluminum shortfall of 3.6 million tons. Oplinger emphasized the necessity of Canadian aluminum to meet U.S. demand until new domestic smelting capabilities are established.
