Import tariffs on primary metal, and semi-finished products, tend to have a mixed impact on scrap markets — and the effects aren’t always straightforward.
When tariffs are applied to primary and semi-finished metals, they raise material domestic prices. As a result, high-grade scrap — which can act as a substitute for primary metal — might usually become more valuable.
U.S. tariffs on primary aluminium imports have pushed up the Midwest Premium and narrowed the discount on high-grade scrap like UBC and clean segregated alloys. That’s made high-grade scrap more attractive for domestic buyers, and in some cases, even diverted scrap away from export markets and back into the U.S. system.
But this effect doesn’t extend to low-grade scrap. These grades (e.g., mixed or contaminated scrap) aren’t direct substitutes for primary metals, so tariffs on primary have little to no impact on their export volumes. Those flows continue to be driven by logistics, processing costs, and quality sorting capabilities — not by tariffs.
It’s also worth noting that in many smelters, scrap usage is already near its maximum. If a producer is already relying heavily on scrap, there’s limited room to increase substitution — meaning the effect of tariffs on high-grade scrap demand could be muted.
