LONDON, Feb 11 (Reuters) - If in doubt, double down.

Seven years ago President Donald Trump ordered 10% tariffs

on U.S. imports of aluminium with the stated aim of increasing

domestic primary metal production.

They haven't worked.

This time the tariff is going to be 25% without "exceptions

or exemptions" effective March 4. Together with a similar-sized

duty on steel imports, the ambition once again is to bolster

industrial self-sufficiency in the name of national security.

This is not good news for U.S. consumers, judging by the

sharp jump in the price of aluminium delivered to the U.S.

Midwest.

It's also highly uncertain just how effective yet higher

tariffs will be in rejuvenating the country's aging fleet of

aluminium smelters.

If greater aluminium self-sufficiency is the goal, there's a

much easier way of achieving it in the form of the humble beer

can.

IMPORT DEPENDENCY

Aluminium has yet again been bundled together with steel in

Trump's tariff wars despite very different market dynamics.

While U.S. steel imports account for 23% of the country's

consumption, the ratio is much higher at 47% for aluminium,

according to the U.S. Geological Survey.

The U.S. is particularly reliant on imports of primary

aluminium from Canada, which supplies more than two million

tonnes each year.

The market is already adjusting to the potential shift in

pricing and trade flows.

The CME Midwest U.S. premium contract, which

captures the cost of delivered metal on top of the underlying

aluminium price, has risen by $100 to $629 per metric ton in the

space of a week.

Given the London Metal Exchange cash price is

currently trading at $2,645 per ton, the implied tariff cost is

still only partially priced.

The aluminium market has been here before with the 2018

tariffs, which ended up being highly negotiable. Canada, for

example, was initially included, then exempted, included again

and exempted again, the second time in the space of a month.

The betting seems to be that there will be similar

carve-outs this time around.

However, slightly ominously for U.S. buyers of Canadian

metal, European premiums have dropped sharply, suggesting that

Canadian shipments will be diverted from the higher-tariff

American market-place.

POWER TRUMPS TARIFFS

While steel tariffs have moved the domestic production dial,

the same is not true of aluminium.

The number of U.S. operating primary aluminium smelters has

shrunk from 20 at the start of the century to just four.

The only plant to reopen after the 2018 tariffs - New Madrid in

Missouri - closed again in January 2024.

U.S. primary metal production last year was 670,000 tons,

compared with 740,000 tons in 2017, the year before import

tariffs were first enacted.

All hopes rest on Century Aluminum's ( CENX ) "Green Aluminum

Smelter Project", which is being backed by the Department of

Energy with a $500 million award made under the previous

administration's Bilateral Infrastructure Law and Inflation

Reduction Act.

Century has just drawn down the first $10 million tranche to

fund further studies, which tells you a new smelter won't be

firing up any time soon.

Critically, the project has yet to find a committed source

of energy, particularly the renewable energy it needs to

classify as green.

Aluminium is produced by electrolysis and smelters consume

huge amounts of power to convert alumina into metal.

The demise of the U.S. smelter sector has been primarily

down to high power costs and they remain the major hurdle for

any greenfield smelter project.

Indeed, the competition for power is intensifying as data

centres compete for renewable energy.

DON'T LITTER

There is an easier way for the United States to reduce its

import dependency.

The solution is to hand but too often thrown away.

The country is the world's largest user of aluminium

beverage cans with 106.7 billion sold in 2021, accounting for

over a quarter of the global market.

The recycling rate was just 43% in 2023, down from a peak of

57% in 2014, according to the Container Recycling Institute

(CRI).

Just under half of all cans are thrown away to be

land-filled or trashed. More metal is lost through improper

sorting at recycling facilities, with losses assessed at roughly

one third.

The total wastage in 2021 amounted to over one million tons

of aluminium with a notional value of $1.6 billion, CRI

calculates.

That's a lot of aluminium being thrown away every year and

significantly more than domestic production of primary metal.

Moreover, remelting a beverage can is much more energy efficient

than producing virgin metal since it typically requires only 5%

of the power.

The countries with the highest recycling rates all operate

some form of deposit return scheme.

Indeed, the U.S. states with deposit schemes achieved a

recycling rate of 74%, compared with 26% for non-deposit states,

according to the CRI.

Roll out more deposit return schemes and some of that one

million tonnes of landfill could be returned to the supply

chain.

America's energy constraints mean that boosting recycling is

going to be a faster way of shoring up its domestic aluminium

supply base than tariffs.

But tariffs are what the aluminium market and the U.S.

consumer are going to get.

The opinions expressed here are those of the author, a

columnist for Reuters.

(Editing by Susan Fenton)