Leeham News and Analysis
There's more to real news than a news release.
Leeham News and Analysis
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Trump vows to add tariffs to aluminum and steel; Airbus, Boeing, suppliers will be impacted
By Scott Hamilton
Feb. 10, 2025, © Leeham News: President Donald Trump announced plans to impose a 25% tariff on imported aluminum and steel this week, including from the USA’s largest supplying countries: Canada and Mexico.
According to Trump’s weekend announcement, China will be tagged with a 10% tariff. Other countries also export these products to the USA, but Trump didn’t mention any.
In the aerospace industry, Boeing and Airbus will be affected. So will suppliers to the two companies.
Boeing produced about 300 aluminum aircraft last year, each consuming about 30 tons in production, or 9,000 tons for 2024. For 2025, LNA estimates Boeing will produce 500 aluminum aircraft. At 30 tons per aircraft, this is 15,000 tons of high-grade aluminum alloys.
Spirit AeroSystems’ US operations is one of the largest content suppliers of wing systems for the Airbus A320 family and a significant supplier for the Airbus A350 XWB, according to its financial filings. Under Spirit’s supply agreement with Airbus for the A320 and A330, “we supply products for the life of the aircraft program. For the A350 XWB program, we have long-term requirement contracts with Airbus.”
CNBC has a chart showing alternative country producers of aluminum and steel. Shipping costs and the extra time in shipping from such distances must be factored in.
There are 9 aluminium foundries in Canada, 8 of which are located in Quebec where the cost of electricity is the lowest in North America. The largest Canadian foundry is Alouette, which has an annual output that equals the entire US annual production.
Also, Canadian aluminium is 100% produced with green energy. And at the request of the United States, under Trump’s First Administration, bulletproof traceability has been implemented for aluminium imported from Canada, in order to prevent dumping from China.
Tarifs on imported aluminum makes no sense for American manufacturers, especially automakers and the aircraft industry, because it will significantly increase their productions costs. It’s the last thing that Ford and Boeing need right now. And it’s not the best way to Make America Competitive Again.
Norman:
That assumes logic and in this case, that does not apply. A two year old throwing a temper tantrum has no logic.
The world has gone mad. And while I understand that this has a major impact on so many areas, I also hope that it will ripple like Tsunamis through the US economy.
The voters wanted this, now they get it.
Hopefully then the voters will wake up and make more reasonable decisions in the future, though my expectations are very low.
Well certainly the US went over the edge. I guess there are some other parts as well but the current instability is the US
Has the tariff increased on finished aluminium products as well?
Tariffs not officially announced yet. Details not announced.
So there is a plan? I got the impression we are risking billions of dollars on the game of luck
Plan is to stir the pot and then claim how wondrous the current deal of the century was.
Also known as throwing spaghetti at a wall and seeing what sticks.
Great, now all those ex-government workers can go work at ALCOA
Lol
The fearless leader is thinking that Canada will become the 51st state just to avoid the tariffs.
Trump throws ketchup and Big Macs at the wall. Really.
Those they want to destroy the gods first make mad…
Should be interesting..
Sadly its all “too Interesting”
Its not like the world does not have enough problems
I’m not that well informed regarding commodity pricing, but aluminum seems to go for $2500 per ton (or tonne). 30 such ton(nes) in an airplane would be $75,000. A quarter of that is $19,000. A tariff on aluminum doesn’t help Boeing, or Airbus, but I’m not sure whether this should be our focus.
I always thought the purpose of tariffs was to address a market failure, or protect an important national interest, or further a legitimate industrial policy.
My real problem with this tariff is that Trump acts impulsively, he can’t think 2 steps ahead, and his attention span is about 14 seconds.
Stan:
Do not attempt to interject logic into the assessment, this plays on a whole different field than logic.
Stan,
As usual, the devil is in the details.
Does Spirit buy the raw commodity, at the price you quoted? Do they then smelt it down into aviation grade material (which the engineers here at LNA say is quite different and more stringent – read: costly, then regular old general purpose base products?)
Tariffs or duties are paid on the invoice price, which is provided to the broker who is bringing in the goods, for the purchaser.
Are they buying the finished product or perhaps the billets and rolled AL to make the parts out of?
Any finished product is going to have an increased price, as will AV grade material, over plain old commodity price.
If it’s a billet to be machined at SPR, then it has to be machined – loss of material.
Rolled AL is cut to size and shape – also losing some material in the process.
There’s always waste.
Perhaps one of the engineering posters will jump in and detail what comes in and what is done to it?
I have a sneaky suspicion that a 25% metals tariff will end up costing more than $19k per airframe, for just the raw commodity.
Maybe custom fees only on pure aluminium, Aircraft grade i.e. 7075-T6 is an aluminium alloy that can be classified as another material. Still if Boeing launches the 797 it will be Al-Li and carbon wing. If US get serious on recycling it has plenty in circulation and Trump can just copy Nordic-German recycling regulations and equipment.
Regulations? The US? Now?
Wrong party.
But as is presented here, the scrap produced contains all kinds of mixed in cutting oils and chemicals. It would needed to be re-smelted.
Which brings us back to the lack of energy and the lack of smelters in the US.
But thanks for the laugh…
You really believe that the Trump administration know the difference between per exemple 2025 Al vs 7075 T6 ? Lol. For them it all the same and there will be no sub classification of tarrifs whatever the grade is.
Just to confirm:
Spoke with a source and the metals that come to Spirit (and other suppliers) are, in fact, ready for working and not the commodity.
I was also told that it is not uncommon to get an aircraft grade (HQ) aluminum billet, weighing 200lbs, and machine it into a 30lb part.
The leftovers, due to the fluids used during machining, are sold off to a scrap recycler, for pennies. Same for the sheet metal.
That seems odd to sell off as scrap.
Biggest cost of aluminum is the smelting. You should be able to clean the shavings as it were and then recycle into the processing system.
Its why aluminum cans are a mainstay at recycle centers.
Lead from batteries is reprocessed and used in new batteries. Batteries have a free turn in at any battery seller (you used to get $5 a battery).
I know other high value metals that are machined are collected and recycled (titanium).
Recycled, yes. But not for the Spirit manufacturing process.
Maybe it gets turned into cans, after the toxic stuff is cleaned out. But elsewhere.
As a manufacturer, you’re paying good money to a skilled machinist to turn out FAA certified parts, to fly on commercial aircraft.
You’re also paying good money, to the AL manufacturer, to provide you with a certain grade of raw material, to turn into those parts.
If those raw materials come from a tariffed country, they will now cost you 25% more.
“If those raw materials come from a tariffed country, they will now cost you 25% more.”
Nope. Economics dictates that once you eliminate lower cost supplies by slapping on tariffs, the market price will shift ‐ benefiting those domestic suppliers.
You are, assuming of course, that there is a supply to be had, domestically.
https://en.wikipedia.org/wiki/List_of_countries_by_aluminium_production
China 41,500 2023
India 4,100 2023
Russia 3,800 2023
Canada 3,000 2023
United Arab Emirates 2,700 2023
Bahrain 1,600 2023
Australia 1,500 2023
Norway 1,300 2023
Brazil 1,100 2023
Malaysia 980 2023
Saudi Arabia 932 2018
United States 750 2023
12th place, just ahead of Finland.
As explained above, a key element to the production is cheap electricity. Plus the plants needed to make it.
So how fast do you think the US can come up with the plants and cheap electricity to make AL?
Yep, at one point the Aluminum industry was centered in Washing State due to the massive hydro resources there.
Unless you are in one of the original districts formed post damns, then with population growth you pay more.
@+Karl – Ahhh. Good point. “Buy to fly” ratios of 10:1 are not uncommon. This is starting to be real money.
… that might be a good place to look for a process improvement to reduce scrap.
I had a look around the ‘net, concerning the ‘buy to fly’ ratio, what is used in the industry and the kind of numbers being talked about.
Midwestern Steel & AL Supply sells AL 7075 in stock size of 144″ x 60″, of various widths.
1″ will cost you $3,462 and weighs ~875lbs.
2″ = $6,825 ~1,750lbs
6″ = $20,460 ~5,244.
Sure, these are online prices and bulk prices for a company will be discounted, but still – looks to be around $4 a pound.
That 200lb piece, milled to 30lbs, costs you ~$800, with $680 ending up in the recycling bin.
Had a quick look at scrap prices
Any aluminium swarf £850 /tonne
High grade non mixed will be worth more
More chunky pieces around about £1500/tonne,again non mixed is worth more
@grubbie
How much do you get for milled off pieces, mixed in with all kinds of cutting oils?
Last time I went to the scrap yard in January I got £950 per tonne.This was all kinds of random grades and shapes,mainly anodised some painted and some with a monel rivets and steel fasteners still attached.So this seems to be sort of the base price,although whatever the metal they don’t seem to like shavings and swarf
Maybe Canadian exports to Europe and Asia will increase now. Because it is less attractive for the exporting companies to serve US customers.
Canada is America’s biggest customer, and by a long shot:
American exports (goods and services) to China amount to 196G$.
American exports (goods and services) to Canada amount to 428G$.
The US trade deficit with Canada is 54G$. This relatively small deficit includes 104G$ of crude oil, imported at a rate of 4 million barrels a day. Therefore if we exclude oil, the US have a trade surplus of 50G$ with Canada. And by the way, that oil (WCS) is sold at a 20% discount to the US because of geographical accessibility.
And to that point, IIRC – New England is getting discounted hydro-electric power from Hydro-Quebec.
But who was the guy who negotiated that terrible trade deal with Canada, in the first place?
Yes, New England has a 20 year contract with Hydro-Québec to import 9,45 TWh per year of electricity to Boston, starting December 2025 when the transmission lines will have been completed on both sides of the border.
And a few months after that, sometime in 2026, New York itself will start receiving 10,4 TWh of electricity per year from Hydro-Québec, also when their respective transmission lines will have been completed. This 25 year contract will cover 20% of New York’s electricity needs.
The terms of both contracts are indeed advantageous for Boston and New York, and the beauty of it all is that the flow of electricity can be reversed when the weather will allow offshore windmills to generate surpluses. That means the electricity will be green both ways. And what’s even more interesting is that Quebec needs additional power in the winter because of the cold, while New England usually needs huge amounts of power during the summer to drive the ubiquitous air conditioning systems.
Yea, he blows up his own deal so he can get attention.
I am being careful in the posts as not sure if we can call Trump what he is, but dysfunctional is kind. Narcissistic. His mental deterioration only makes bad even worse.
Great points illustrating how insane Trump’s threats and insults to Canada are! I would add that the over 4 million barrels a day of cheap Canadian oil allows the US to export a corresponding amount of its oil to other countries at a premium thus allowing the US to boast that it is a net oil exporter.
Cheap Canadian oil subsidizes US oil exports which happen to be the biggest US export commodity. It is Canada that has made the United States energy secure. Sixty percent of US oil imports come from Canada versus just 4.4% from Saudi Arabia (what were all those M.E. wars for?) A further 10% comes from Mexico. I hope Americans are ready for a big price shock at the pumps.
As a Canadian, it frustrates me that none of our “leaders” have been able to communicate to the American public how beneficial Canada is to the United States. Many Americans don’t have a clue about how big the US/Canada trade relationship is. At least half the country has no idea how important Canada is for their wellbeing.
Many of us do know and have great respect and even affection for your country. I have Canadian relatives. I live in California. We would love to have California become part of Canada (only a fantasy I know). Trump’s disrespect for Canada (and others) is shameful to say the least.
On a related note:
“Danish petition to buy California attracts hundreds of thousands of signatures”
https://www.cnn.com/2025/02/12/europe/danish-petition-purchase-california-scli-intl/index.html
😅
The Guardian
““The steel and aluminum tariffs 2.0 will put an end to foreign dumping, boost domestic production and secure our steel and aluminum industries as the backbone and pillar industries of America’s economic and national security,” Peter Navarro, Trump’s top trade adviser, told reporters.
“This isn’t just about trade. It’s about ensuring that America never has to rely on foreign nations for critical industries like steel and aluminum.”
as side note Google AI “The United States produces a small percentage of the world’s steel. In 2023, the US produced 6.8 million metric tons of crude steel, which was about 5% of the world’s total steel production. ”
Google AI “As of 2022, the United States produces less than 2% of the world’s aluminum, representing a very small share of global primary aluminum production. “
@Dave P.
Best comment posted here and the facts. Much appreciated.
Sure, as long as American users are willing to pay through the nose for AL produced domestically.
First off, you need a ton of electricity to produce AL. Which means unless the country has some untapped production, you need to build more power plants.
Then, plants will have to be built to produce the AL.
Who’s going to pay for all this? The billions needed to fund it all?
The US government? Is the government going to control the means of production, for ‘national security reasons’?
You know what’s that’s called, right?
Communism.
BTW – you do know that it will still have to import the raw material, bauxite – to make that happen.
World 400,000 30,000,000
Australia 98,000 3,500,000
Guinea 97,000 7,400,000
China 93,000 710,000
Brazil 31,000 2,700,000
India 23,000 650,000
Indonesia 20,000 1,000,000
Jamaica 6,000 2,000,000
Russia 5,800 480,000
Saudi Arabia 4,600 180,000
Kazakhstan 4,300 160,000
Vietnam 3,700 5,800,000
Turkey 2,000 63,000
Greece 1,200 Undisclosed
https://en.wikipedia.org/wiki/List_of_countries_by_bauxite_production
Maybe Trump can buy Australia too, to secure US interests.
—————–
Do you want to know what is really going on?
The Trump tax cuts for the wealthy are expiring and Donnie needs a way to pay for them.
Tariffs will do the trick.
The reality is you can’t turn anything around on a dime (or is that a penny?)
So you are locking in higher prices.
In the meantime users only option is to pay the higher prices from abroad. As there is no domestic supply or no where near enough, that goes into a huge tax increase.
Last time the farmers were paid off. But they lost markets and its taken years to get them back, rinse, wash and repeat.
Of course the selling point for Trump was he was going to lower prices. Now its hedging and waffling and they are still going up.
Anyone can wreck something.
In the mean time, businesses may start layoffs as they lose business:
“Trump’s tariff on steel imports has caused the country’s remaining major nail producer to lose about 50% of its business in two weeks. Company laid off 60 temp workers. It could slash 200 more jobs by the end of July and be out of business around Labor Day”
The situation in the United States is that in the last 12 years they have closed down 9 aluminum smelters on a total of 14, because they were not competitive.
The problem is that to replace Canadian aluminum production would require 4 additional Hoover dams for which there is not enough water even for the existing one. The only viable alternatives would be gas and uranium, but today the electricity market in the United States is such that it cannot make the aluminum industry competitive.
Last time the imposed tarifs were 10% and these had a disruptive impact on business across the Unites States. But this time around at 25% we can expect that they will have a destructive impact if they last too long. And I don’t see any benefits in doing this for a short duration nor a longer one, let alone as a permanent measure.
Just to give a simple and easy to understand example, the tarifs will add 1000$ to the cost of a Ford F-150.
Back to it is not rationality that is driving this.
There used to be an aluminum smelter on the Columbia River near Wenatchee. I wonder if it is suitable for re-opening production?
I believe hyperscalers are beating over one another for power supply for their upcoming AI DC.
The plant is in the process of demolition to prepare for redevelopment.
Canada.should retaliate by imposing 25% export tax which would increase the price for American aluminium consumers rather than targeting some unfairly selected cheese manufacturer.This would also provide funds for the Canadian government and increase the competitiveness of the rest of the world’s aluminium products.Airbus could gain a huge temporary advantage if European governments banned the export of airliners to the United States,making them available for sale to the rest of the world at higher prices.US airlines would then grab most of Boeings production,killing their export base.
I assume that the USA government kept the tariff money that was unfairly imposed on Airbus and various cheese and wine makers?It seems to be just crude blackmail
The biggest problem I see with these and other tariffs is the ‘irritated’ rest-of-world increasing their trade with each other, finding friendships elsewhere, and bypassing the US as much as possible, selling only fully finished products to the US, and reducing further manufacturing/finishing/assembly in the US.
The US has out priced itself (as many have) and you just can’t go backwards as citizens have built-up debts to service.
Global trade should have been more tempered way back when, the horse has bolted, you can’t really go backwards unless your population is willing to go backwards.
On the same subject, here is a recent French Super Bowl ad, deliberately played in English, with subtitles:
https://www.youtube.com/watch?v=L4hPbE40Op8
“Public policy shouldn’t aim to help manufacturing.
But nor should it aim to hurt manufacturing.
And that is exactly what steel and aluminum tariffs do, raising input costs for American manufacturers.
Not to mention raising borrowing costs & the dollar.
A self inflicted wound.”
https://x.com/jasonfurman/status/1889115505044177308
That’s 60k vs. 10.7m!
“The number of American workers who would stand to benefit from a 25% tariff on aluminum imports are outnumbered 177-to-1 by American workers employed in downstream industries who would be harmed by the tariffs.”
https://x.com/JGodiasMurphy/status/1889327981320962159
‘I’ve long been waiting for people obsessed with trade deficits & exchange rates to explicitly argue: “American consumers are living too well, stuff is too cheap, and we plan to fix by making it harder for them to buy stuff–which will be more sustainable in the long run.”
https://x.com/jasonfurman/status/1889354406912831567
“I think one thing that really gets lost in the conversation about trade is that there is essentially no scenario where we reduce the overall deficit and Americans continue spending as much as they currently do. That’s true regardless of why you think we have a trade deficit.”
https://x.com/JHWeissmann/status/1889327277218857199
10-year treasury yield shoots above 4.6%
for the sake of variety
777X Deliveries Likely Delayed Again
Emirates’ budget doesn’t account for the new jet in 2027, according to a report.
‘According to reporting by Bloomberg, deliveries of the upcoming 777X aircraft could be delayed until at least the second quarter of 2027 – or even 2028. The report cited unnamed individuals familiar with Emirates’ financial and operational planning, who told Bloomberg the carrier’s own budgeting doesn’t account for the new jet in 2027.”
Soo-prize, soo-prize, soo-prize! 2030, maybe?
Always look for the upside™
Helping keep the aluminium import deficit under control
Sure – if you raise prices enough with another tax, simple supply and demand will take over.
In the case of new car sales, demand will drop as prices increase, as companies try to pass on the added cost to consumers.
There is no competing domestic product able to replace what is being imported. The US does not have a domestic supply of bauxite, nor does it have the current power capacity OR smelting capacity to make AL.
But those tax revenues from tariffs sure will go a long way, to covering the tax breaks for the 1%.
“Ford CEO @jimfarley98 will warn members of Congress that 25% tariffs President @realDonaldTrump is proposing on Canada & Mexico will ‘blow a hole’ in the US auto industry ‘A lot of cost, a lot of chaos’
https://x.com/KeithNaughton/status/1889351094863622558
Where do the ores for smelting iron or aluminium come from? Probably imported, I guess? Will those imports have tariffs imposed on them as well, or will the exporters find their own ways to tax the US users? A potential double whammy! Mr Trump seems to be a crackshot where his own feet are concerned (or should that be crackpot!)! – and willo rthe crossborder electricity deal remain in place with the new trade hostilities? I can see Canada insisting on renegotiating it on rather less favourable terms!
If the US can’t even refine its own oil, then how do you expect it to smelt imported bauxite?
We already know what the impact of Trump’s steel and aluminum tariffs will be on the economy. He did this before during his first time and studies showed that for every job created 75 were lost!
This should not surprise anyone who has a basic understanding of economics and yet Trump is being allowed to repeat the same disaster with nary a protest from American manufacturing industries. I suspect they are afraid that they will endure the wrath of King Trump if they speak out, but the CEOs of the Big Three auto companies and Aerospace companies need to speak out LOUDLY right now before Trump destroys their balance sheets and steel and aluminum are just the start of it! Trump wants to tariff chips next!
https://www.investopedia.com/metal-tariffs-cost-at-least-75-times-more-jobs-than-they-saved-8789838
Do EU based airlines pay VAT taxes on Boeing aircraft that they take possession?
Canada, Mexico steelmakers refuse new U.S. orders
Stelco has been telling U.S.-based consumers it is pausing sales quotes
FAFO
“Stelco parent Cleveland-Cliffs Inc., based in the U.S., didn’t immediately respond to requests for comment.”
They should raise their prices, as due to the import taxes, their exports will likely go down. To compensate for the lower volume, they should raise the prices accordingly by 25% to make up for the expected losses.
‘Economist Michael Hicks of Ball State University studied the impact from Trump’s first tariffs, which President Joe Biden left in place. It took about six months before the United States saw the first impacts on costs rising on goods from China and a loss of jobs across all types of U.S. manufacturing and agriculture.
His data showed that in January 2017, Michigan had 617,000 manufacturing jobs. By the time the tariffs hit in March 2018, there were 627,000 manufacturing jobs with employment hitting a peak in December of that year at 633,900. But that would be the last time Michigan saw that level of employment in manufacturing.
“In January 2020, the last month before the COVID pandemic hit, there were 619,000 manufacturing jobs in Michigan,” Hicks said. “So the Trump administration had effectively killed off all the manufacturing job growth by the month before COVID, and that was due to tariffs.”
the US Vultures are circling
“Treasury Secretary Scott Bessent presented the proposal for the U.S. to own half of Ukraine’s rare earth minerals to President Volodymyr Zelenskyy in a draft contract he brought to their meeting on Wednesday in Kyiv”
The only problem with that is most of the rare earth minerals are in the East under territory controlled by Russia and Russia will never give up. This reminds me of Trump’s first term when he gave an order to withdraw all US troops from Syria. The people surrounding Trump convinced him to keep US troops in Syria to “keep the oil”. I believe his golf buddy Lindsey Graham convinced Trump to keep US troops in Syria to “keep the oil”. To this day US troops are in Syria as sitting ducks for no other reason than to “keep the oil”. I am afraid Trump will get suckered again. The DC uni party is determined to keep the insane war in Ukraine going and they know from experience how to manipulate Trump.