President Trump’s abrupt decision to double U.S. import tariffs on aluminum from 25% to 50% (effective June 2025) has sent shockwaves through the global metals market. Crucially, the tariff excludes aluminum scrap, recognizing it as a vital raw material for U.S. manufacturers. This carve-out means U.S. buyers can import scrap without the 50% levy, even as tariffs hammer other aluminum products. The result: scrap shipments to the U.S. have surged, threatening a transatlantic “scrap war” with the EU.

Doubling the tariff has triggered a U.S. cost shock. The Midwest physical aluminum premium – the extra cost U.S. buyers pay over the London Metal Exchange (LME) price – soared to a record of $1,325/ton after the announcement. (For context, that’s on top of the LME benchmark of ~$2,430/ton.) U.S. buyers now face a steep tariff-induced price premium, effectively an extra $0.67/lb, which Goldman Sachs estimates is needed to fully reflect the new 50% rate. In practice, U.S. importers and mid-stream fabricators are already feeling the pinch: premiums jumped about 54% in early June to over $1,279/ton, and are expected to climb further. In the short term, higher costs are likely passed down the chain – U.S. manufacturers of cans, cars and construction materials will ultimately pay more, even if domestic scrap partly offsets the effect.

At the same time, global scrap flows have been drastically reshuffled. U.S. imports of aluminum recyclables jumped to over 80,000 tonnes in March 2025 – the highest monthly volume since 2022. Canadian and Mexican suppliers in particular flooded the U.S. market, taking advantage of the scrap exemption. But the price gap has also lured material away from Europe: exports of EU scrap to the U.S. spiked in early 2025 and are expected to accelerate now that U.S. buyers can outbid nearly anyone. In fact, European Aluminium (the industry association) reports that exports of scrap from the EU to the U.S. jumped 273% in Q1 2025 compared to a year earlier – accounting for two-thirds of the EU’s entire 2024 scrap exports in just three months. These flows have driven U.S. premiums up (as scrap competes with LME shipments) and driven the European premium down. Mid-stream recyclers and fabricators in the U.S. are cashing in: freed from the tariff, they are buying as much scrap as possible, even from overseas.

• Record U.S. scrap imports: U.S. scrap imports hit ~80,000 tons in March, highest since 2022.
• Regional shifts: Shipments surged from Canada and Mexico (top U.S. suppliers), while European exporters have sharply raised their volumes to the U.S. as the transatlantic premium gap widens.
• Premium reversal: The U.S. Midwest premium jumped 164% in 2025 so far to about $1,279/ton, while the EU premium fell roughly 45% on scrap outflows.

EU Eyes Scrap Export Controls

European producers and recyclers are scrambling to protect their raw material supplies. With aluminum scrap escaping to the U.S. en masse, the EU’s Circular Economy goals are at risk. The European Commission has already flagged high scrap exports as a major challenge to recycling targets. Industry leaders are demanding swift action. Paul Voss, Director-General of European Aluminium, warns that without intervention the EU faces a “full-blown scrap crisis,” with entire supply chains threatened by what he calls “alarming” outflows. Voss and others want the Commission to impose a matching duty on aluminum scrap exports, at least to the U.S., to halt the “scrap leakage” and secure Europe’s recycling feedstock.

Indeed, Brussels has begun examining countermeasures. A leaked draft “Steel and Metals Action Plan” (part of the Green Industrial Deal) explicitly contemplates imposing export duties or limits on scrap metal by Q3 2025. In March 2025 the Commission reportedly discussed export fees as high as 25% on scrap. At the same time, the EU’s revised Waste Shipment Regulation is giving Brussels new tools to block waste exports that damage third countries – measures that could be used to curb indiscriminate scrap shipments. The industry also pushes for an EU-wide “reciprocity rule” to ensure countries that restrict scrap imports (like China) can’t flood the EU market, leveling the playing field.

Possible EU measures under consideration include:

• Export tariffs on aluminum scrap: The Commission may impose duties (reportedly up to 25%) on scrap shipments to the U.S. or globally.
• Export fees/controls: EU “scrap leakage” has prompted talk of export fees or stricter export rules for all destinations.
• Incentives for domestic recycling: Plans call for boosting EU demand for scrap through recycled-content targets and incentives, helping keep material in Europe.

Each step aims to prevent the flood of raw material into the U.S. that threatens European recyclers and higher-value producers. Novelis – the world’s largest aluminum recycler – has even been in direct talks with Brussels, receiving “positive feedback” on finding solutions to stem scrap outflows. As Novelis’ Emilio Braghi notes, the price gap is “not sustainable”: it is draining Europe’s scrap pool and inflationary for global metal prices.

Global Scrap Market and Outlook

This battle over scrap is unfolding in a global context. China – the world’s biggest buyer of secondary aluminum – now takes roughly 1.8 million tonnes of scrap per year. Beijing has already relaxed purity rules and pushed domestic recycling because primary production is capped. Now Chinese buyers face a double squeeze: export restrictions being mulled in Europe and fierce competition from U.S. buyers in Asia. The scrap market may fragment into regional bubbles, altering long-established trade routes.

For global supply chains and logistics, the stakes are high. U.S. manufacturers will pay more for metal inputs, while European processors may struggle to get enough scrap unless new rules plug the leak. Shippers are rerouting cargo: containers of end-of-life aluminum destined for Europe are increasingly diverted to North America, and vice versa for some semi-finished goods. In short, this tariff clash is reshuffling aluminum routes worldwide and could spur further “decoupling” in metals trade.

Key takeaways:

• U.S. 50% aluminum tariffs (with scrap exempt) have skyrocketed American premiums and costs.
• Scrap shipments to the U.S. are surging: imports hit record highs, drawing material from Canada, Mexico and especially Europe.
• The EU is preparing countermeasures to stop a scrap crisis: export duties and tighter controls on scrap exports are under review.
• The dispute underscores the power of scrap as a strategic raw material. Recycling industries on both sides of the Atlantic are now center stage, and global aluminum supply chains are being reshaped as a result.

Ultimately, the recent tariff escalation has done more than increase prices – it has ignited a global tug-of-war over recycled aluminum. As Europe and the U.S. grapple over scrap, all participants – from recyclers to shippers – will feel the impact. The coming months should reveal whether coordinated policy (or new trade agreements) can stabilize the market, or if this conflict will deepen, raising costs and risks across the aluminum supply chain.