The complex and ever-changing nature of President Donald Trump’s tariff policy is exposing the fragility of the aluminum supply chain. After nearly three months of a 50% tariff, the EU is feeling the pressure, scrambling to neutralize the negative effects.

Brussels is preparing emergency measures to protect its 40 billion euros aluminum industry, which employs approximately 250,000 people directly and supports an additional 1 million jobs. The problem is the policy imbalance.

While finished aluminum exports to the United States face a 50% tariff, scrap metal shipments are exempt. That situation has created a flow of scrap toward the U.S., starving European recyclers of critical feedstock.

Also Read: US Aluminum Tariffs Risk Supply Chain And Food Security, Industry Insiders Warn

“Plants are already shutting down capacity, and for our recyclers this is not about shrinking profit margins but survival,” Paul Voss, head of European Aluminium, told the Financial Times. “The bloc only has weeks to get this right.”

The shortage is forcing European recycling plants, many of which have invested heavily in new furnaces to meet the demand for clean energy, to scale back their operations. Scrap dealers have opposed the idea of Brussels imposing a levy on exports, but officials warn that action may be necessary by September. Without relief, Europe risks losing long-term competitiveness in a sector vital for electric vehicles, wind turbines, and other low-carbon technologies.

Meanwhile, in the United States, prices have surged well above global benchmarks. The Midwest premium, the surcharge buyers pay over London Metal Exchange prices to source aluminum in the U.S., jumped 81% after the tariffs took effect in June. Aluminum trades near $2,600 a ton globally, but U.S. buyers are paying close to $4,200 a ton.

The upheaval has forced even major producers to adapt. Rio Tinto (NYSE:RIO), one of the world’s largest producers, operates smelters and refineries in Quebec powered by cheap hydroelectricity. Typically, most of that output flows south to the U.S. Now, the 50% tariff has made those shipments unprofitable. Instead, Rio has turned to buying aluminum on the U.S. spot market, which is produced by rivals such as Alcoa (NYSE:AA), Century Aluminum (NASDAQ:CENX), and Emirates Global Aluminum, and reselling it to American customers.

Yet, in the U.S., the aluminum market is not nearly as resilient as the domestic industry would like it to be. Only four smelters remain in operation, a sharp decline from past decades. The sharp rise in commodity prices, coupled with a fragile supply chain, has sparked concerns. In May, the Can Manufacturers Institute warned that rising aluminum costs would pass on to consumers in the form of higher prices for canned goods, posing a risk to the food supply.

For analysts, the risks extend beyond price volatility. “The tariffs are already starting to reshape global aluminum flows, particularly affecting producers in Canada,” Ewa Manthey, a commodity strategist at ING, said for Bloomberg.

“Despite the tariffs, the U.S. aluminum industry remains constrained, domestic capacity is insufficient to meet demand, and new plants face high energy costs and long lead times,” she noted.

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