SAGUENAY, Quebec -- When Nazi planes were blitzing London during World War II and the U.S. needed to build more aircraft and munitions in a hurry, it helped turn this remote place in the Canadian forest into an aluminum-production juggernaut.
Thousands of Canadians labored through frigid conditions to build smelting pots and a hydropower plant to fuel them -- in just 18 months. Ever since then, Saguenay's aluminum plants have supplied American industry.
Now, President Trump's trade war has cast Canada's aluminum smelters as the enemy -- and U.S. businesses and consumers are paying a price.
During his first term, Trump exempted Canada from a 10% aluminum tariff that he imposed on other trading partners. After he returned to the White House, he stripped Canada of its exemption and raised the tariff rate on aluminum to 50%.
"They've treated the United States very unfairly," Trump said last month about Canada. "They have been one of the worst countries in the entire world." He has said the U.S. has no need for Canada's natural resources.
Aluminum has emerged as one of the trade war's biggest conundrums. The steep tariff -- imposed in the name of national defense -- is intended to stimulate U.S. production. Yet the enormous power requirements for making aluminum have meant that Canada, where abundant hydropower has kept electricity prices from rising as sharply as in the U.S., has supplied about 70% of U.S. aluminum imports in recent years.
The tariff has pushed aluminum prices in the U.S. to a record premium over global benchmarks, punishing home buyers, data-center developers, automakers and grocery shoppers. In addition to the new levy, trading restrictions on Russian metal and the Iran War, which choked off Persian Gulf exports, have contributed to global price increases.
In Canada, Prime Minister Mark Carney is turning to Europe to forge new trade partnerships. The European Union's top official said last month that she would work to add Canada as the trade bloc's first associate member. Trump responded by threatening further tariffs on Europe and calling Canada "a terrible trade partner."
Alcoa, which dominated American aluminum production for decades, built the facilities upstream from the Saguenay Fjord, expanded them during World War II, then spun them off to meet antitrust rules. The hydropower stations, smelters, ore docks and other facilities are owned now by Anglo-Australian miner Rio Tinto.
Rio, one of the largest aluminum producers outside China, is starting up in Saguenay the West's first new smelters in more than a decade. The company also is working in Quebec to commercialize a new carbon-free smelting process in a joint venture with Alcoa and the provincial government, with support from the Canadian government and Apple.
Much of the Canadian aluminum entering the U.S. comes from Rio's Saguenay operation, which ships about 70% of its output across the border.
"We always call aluminum 'solid electricity,'" said Jérôme Pécresse, who runs Rio's aluminum, lithium and Canadian businesses. "We cannot find a source of power in the U.S. which is anywhere close to what we have in Canada in terms of competitiveness."
In the U.S., Trump's push for domestic smelting has met resistance.
Emirates Global Aluminium, the Mideast's largest producer, and Chicago-based Century Aluminum have said they would spend more than $4 billion to build what would be the largest U.S. smelter, capable of more than doubling domestic production of primary aluminum. The Biden administration awarded $500 million for the project, and Trump has thrown his support behind it with additional incentives.
But opposition to the project has swelled in Inola, the Oklahoma prairie town chosen as the site. Local critics have expressed concerns about pollution and foreign ownership of land and objected to taxpayer-funded incentives to the developers.
After a rowdy, marathon meeting in June where Trump officials promoting the smelter were heckled and booed, the Inola town council placed a moratorium on building permits and entitlements in its industrial park. Owners of property near the site sued in federal court seeking to block construction.
The smelter became a divisive issue in Oklahoma's Republican gubernatorial primary. Former state senator Mike Mazzei came out in favor of it and won Trump's endorsement and the nomination. But he faced xenophobic political ads aimed at the project's Mideast investors.
"Mazzei wants to give your tax dollars to a Muslim country to build a smelter," said the narrator in an ad made by a group called Put Oklahoma 1st. "Foreign workers, foreign landownership, threatening our way of life."
On a public call to rally support for Mazzei, Trump vouched for Emirates Global -- "very fine people with unlimited money" -- and said the smelter would bring jobs, tax revenue and the envy of other states.
"This country desperately needs aluminum," he said. "We get it all from Canada, for the most part, and we need it badly."
American empire
During the 20th century, the U.S. led the world in aluminum production.
In 1886, Charles Martin Hall, a 22-year-old working in the woodshed behind his parents' home in Oberlin, Ohio, had figured out how to mass produce it inexpensively using electric currents. Until then, aluminum had been so difficult to separate from its ore that it was more expensive than gold
The Hall-Héroult production process -- named for the Ohioan and a young Frenchman who simultaneously made the discovery -- ushered in new eras in aviation, electronics, construction, consumer packaging and warfare.
Electricity accounts for about 40% of the cost of making aluminum. A single smelter can consume as much electricity as a city the size of Boston or Detroit.
For decades, the U.S. supported production with low-cost hydropower from federal utilities, the Tennessee Valley Authority and the Northwest's Bonneville Power Administration. By the latter half of the century, though, as consumer power demand swelled, preferential power rates for smelters were phased out. Then China, Russia and other nations also began churning out low-cost aluminum, further squeezing U.S. producers by driving down market prices.
These days, just four domestic smelters are still running of the 24 operating in 2000, when the U.S. last led the world in output.
The U.S. has been adding aluminum recycling plants, which melt old cans and scrap. They use about 5% of the energy required for the chemical reaction necessary to make primary aluminum, but recycled metal isn't suitable for all uses. Some aerospace, high-tech and military applications require the purity of primary aluminum, leaving the U.S. dependent on imports to meet some of its most critical needs.
"You can't protect yourself unless you can make the core inputs," Commerce Secretary Howard Lutnick said this summer at an event to celebrate the return to full production of Century's smelter in Goose Creek, S.C. "We need to have our own means of production."
The South Carolina smelter was the last one built in the U.S., in 1980, and was at risk of closing before Trump put up trade barriers, Century has said.
"China, Canada and other foreign adversaries had dumped massive amounts of aluminum into our country, cheated U.S. trade laws and flooded our markets," Century Chief Executive Jesse Gary said at the South Carolina event. "Today is a direct result of President Trump's tariff program."
Long history
J.B. Duke, the tobacco magnate who started Charlotte, N.C., power producer Duke Energy, recognized the hydroelectric potential of Saguenay early in the 20th century. He had aluminum in mind when he secured a sweetheart deal to harness it. He enticed Arthur Vining Davis, who had started Alcoa with Hall, the Ohio inventor, and was interested in a smelting outpost to feed the booming U.S. market.
Davis imported hydro engineers and aluminum-making technology and had a tidy neighborhood of U.S.-style suburban houses called Arvida built next to the smelters. "This is the American empire," said David Massell, a University of Vermont history professor who has written about the Saguenay watershed. "Bloodless conquest of resources and markets."
When Canada heeded the U.S. call to increase aluminum production during World War II, old plans for another hydropower station and additional smelting capacity in Saguenay were dusted off. The U.S. paid for metal up front, helping to finance construction.
Canada built an air base to protect it. German U-boats hunted ships hauling ore from the Caribbean, killing scores of Canadian sailors. Canada's version of Rosie the Riveter was Jos Alco, a francophone aluminum worker.
The Shipshaw power station, which was built during World War II, has produced electricity nonstop since it started in 1943. Its 13 turbines are the last in a chain of hydroelectric stations that starts in the wilderness about 150 miles upstream.
"We get electricity five times from the same drop of water," Rio's Pécresse said. "Building hydropower-backed smelter infrastructure to serve the U.S. market has always made, and still makes, great sense."
Tariff proponents, including Century, contend that Canada's inexpensive hydropower constitutes an unfair subsidy. They also allege dumping, which trade law defines as selling a product abroad for less than at home or below production costs.
Those allegations have never been made in an international trade case, and Canadian producers have no incentive to sell the commodity below market prices, said Jean Simard, president and CEO of the Aluminium Association of Canada, an industry group.
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