The CEO of one of the largest US aluminum makers has warned that President Donald Trump’s plan to impose a 25% tariff on all imported aluminum could jeopardize 100,000 American jobs. This new tariff rate, a significant increase from previous levels with no exceptions or exemptions, is scheduled to take effect next month. While the goal is to boost domestic manufacturing, there are concerns about triggering a global trade war.
According to William Oplinger, CEO of Alcoa, these tariffs could lead to the loss of about 20,000 direct US aluminum industry jobs and potentially result in the elimination of 80,000 indirect jobs in the US. This could have a detrimental impact on the US economy as a whole, considering the aluminum industry directly employs 164,000 workers and indirectly supports an additional 272,000 jobs in related sectors such as mining, construction, and manufacturing.
Despite Alcoa being based in Pittsburgh, a significant portion of its aluminum production is located in Canada and then exported to the US. Oplinger highlighted the need for an exemption on Canadian metal exports to the US to mitigate the negative effects on US consumers and the industry.
Coca-Cola is already preparing to shift its packaging materials from aluminum to plastic and glass to avoid higher input costs resulting from the tariffs. This strategy shift could potentially lead to job losses at canning facilities working with Coca-Cola.
Canada is the largest source of aluminum imported by the US, with $11 billion worth of aluminum and aluminum-containing goods shipped to the US last year. The US imported a total of $27 billion worth of aluminum from various trading partners, including China, Mexico, the United Arab Emirates, and South Korea. The US’s reliance on foreign aluminum is partly due to countries like Canada having lower energy costs for production.
The potential 25% tariff on Canadian aluminum could cost US customers an additional $1.5 billion to $2 billion annually, according to Alcoa estimates. Tariffs on imports can lead to higher prices for consumers and could result in retaliatory actions from other countries, impacting US exports and potentially leading to job losses.
The previous imposition of tariffs on steel and aluminum in 2018 led to a temporary reduction in imports and boosted domestic production. However, the trade war that ensued resulted in retaliatory tariffs on American goods, raising prices and impacting consumers. It remains to be seen how these new tariffs will affect the US economy and job market moving forward.
Alcoa, in response to the impending aluminum and steel tariffs, recently announced plans to impose tariffs on a range of American goods, including motorcycles, jeans, peanut butter, bourbon, and whiskey. According to Alcoa’s CFO, Oplinger, while the company does have some unused domestic production capacity, it consists of outdated and inefficient facilities that have been dormant for several years. The company is now deliberating on the financial feasibility of investing in upgrading these facilities to avoid the tariffs.
Oplinger, who assumed the role of Alcoa’s CEO in 2023, emphasized the challenges posed by the uncertainty surrounding the duration of the tariffs. He explained that making decisions, such as restarting production, becomes complex when the timeframe of the tariffs remains unclear. Additionally, Alcoa is facing inquiries from the administration regarding the likelihood of reshoring aluminum production in the U.S. Oplinger highlighted that decisions related to aluminum production are long-term, spanning 20 to 40 years, and that investments cannot be based solely on temporary tariff structures.
Notably, the company is cautious about committing to major investments in the U.S. without clarity on the longevity of the tariffs. The report was contributed by CNN’s Alejandra Jaramillo, Chris Isidore, and David Goldman. For more CNN news and newsletters, viewers can sign up for an account at CNN.com.
