American liquor giant Constellation Brands disclosed on July 5th that the Trump administration’s 50% tariff on imported aluminum will result in an increase of approximately $20 million in costs for this fiscal year, pushing the North American aluminum industry chain to the forefront of the game. Although Mexican alcoholic beverages still enjoy tax exemptions, beer packaged in aluminum cans is subject to new taxes, directly impacting corporate profit margins. This seemingly tariff war targeting the aluminum industry actually exposes the deep-seated contradictions between multinational corporations and policy makers in the context of global supply chain restructuring.
Cost transmission: the ‘invisible tax bill’ in beer cans
Under the Constellation brand, beer brands such as Corona and Modro rely entirely on imported aluminum cans from Mexico, and the new tariff policy has increased their cost of aluminum by approximately $1200 per ton. Despite CFO Gals Hankinson’s emphasis on “difficulty in fully transferring costs,” the market has responded: its stock price has fallen by 31% over the year, and its market value has evaporated by over $13 billion. Interestingly, the Canadian Aluminum Association has revealed that the actual implementation rate of tariffs on Canadian aluminum by the United States is only 65% of the declared amount, implying that companies may avoid some costs through transit trade, but this gray operation faces the risk of customs review.
Supply Chain Restructuring: Canadian Aluminum’s’ Hedging Strategy ‘
To cope with the impact of tariffs, Canadian aluminum companies are accelerating capacity upgrades. Alumina Alouette has invested $1.1 billion to expand its Quebec smelter, with an expected production capacity of 650000 tons by 2026, a 40% increase from the current level. This action is not only to meet the demand of the United States, but also aimed at seizing the European market – after the EU imposed additional fees on imported aluminum due to carbon tariffs, the competitiveness of Canadian aluminum in the automotive manufacturing field has significantly increased. Jean Simard, CEO of the Canadian Aluminum Association, revealed that if US tariffs continue until 2026, the government may activate the “Industry Stabilization Fund” to alleviate pressure on businesses through tax credits or low interest loans.
Industry War: The tug of war between pricing power and policy game
Alcoa’s financial report shows that in Q1 2025, it suffered a loss of $20 million due to tariffs, and the expected loss in Q2 is expected to expand to $90 million. However, its stock price rose by 12% against the trend, reflecting the market’s expectation of long-term tariffs. This contradiction stems from the structural defects in the domestic smelting capacity of the United States: although tariffs aim to revitalize local industries, the aluminum smelting capacity in the United States is only 670000 tons (less than 1/4 of China’s), and restarting idle capacity requires an incremental investment of 3.6 million tons, making it difficult to replace imports in the short term. At the same time, Alcoa North America, a Mexican company, has become a hidden winner under tariffs by vertically integrating “bauxite alumina electrolytic aluminum” to control the overall cost below $2500 per ton.
Consumer Fission: The ‘Green Revolution’ of Beer Can
Tariff pressure is driving technological change in the industry. Constellation brand collaborates with Ball Corporation to develop lightweight aluminum cans, reducing the aluminum usage per can from 13.6 grams to 9.8 grams and saving $0.35 per box. If this “reduction” strategy is popularized, it can reduce the annual aluminum consumption of the US beer industry by 120000 tons, equivalent to reducing the import volume of 30 cargo ships. But environmental upgrading requires the cooperation of the entire industry chain – the aluminum recycling rate in the United States has increased from 50% in 2019 to 68% in 2025, but the production capacity of recycled aluminum still lags behind the growth rate of demand, resulting in high prices of primary aluminum.
Geopolitical Mirror: The “De Sinicization” Dilemma of North American Aluminum Industry
Despite the United States’ attempts to reshape the aluminum supply chain through tariffs, China remains the world’s largest producer of recycled aluminum (accounting for 35% by 2025). Canadian aluminum companies have started importing recycled aluminum ingots from China and processing them into high-end products for export to avoid tariffs. This “roundabout strategy” has led to a 45% year-on-year increase in actual exports of recycled aluminum from China to the United States. More noteworthy is that the European Aluminum Association has filed a lawsuit with the WTO, accusing the US tariffs of violating free trade agreements. If the ruling is upheld, it may trigger a second shock in the global aluminum industry chain.
A hidden battle over resource pricing power is escalating between copper mines in the Andes and aluminum smelters in North America. When tariffs become a conventional weapon in trade games, companies can only find a balance between compliance costs and technological innovation in order to hold their ground in the torn global supply chain.
Post time: Jul-08-2025