MICHEL MARTIN, HOST:
Some ships are passing through the Strait of Hormuz amid the rival Iranian and U.S. blockades, but it's just a fraction of what used to travel on the waterway. Now, we've talked about the impact on oil and fertilizer - now aluminum. Among the hundreds of stranded vessels are cargo ships carrying the metal from Gulf nations to the U.S. NPR's international affairs correspondent Jackie Northam has this report.
JACKIE NORTHAM, BYLINE: The Gulf states produce roughly 10% of the world's aluminum and rely mostly on the Strait of Hormuz to move it globally. But that has ground to a halt since the war began late February and Iran effectively shut down traffic through the strait, says Ross Strachan, head of aluminum raw materials at CRU, which specializes in the metals industry.
ROSS STRACHAN: It's causing a huge amount of uncertainty and substantially higher prices because it's a major choke point on supply.
NORTHAM: The price of aluminum hit a four-year high last week because of Iranian and U.S. blockades of the Strait of Hormuz. The shortage of Gulf aluminum is felt in most corners of the globe, particularly Asia but also the U.S., says Austin Keating with SNIPS, a trade publication.
AUSTIN KEATING: It's a big supplier of raw aluminum - you know, 20%, one-fifth, of the capacity we need to produce here. So that had quite an impact.
NORTHAM: But aluminum had already hit headwinds in the U.S. before the war in Iran. In an attempt to boost domestic production, President Trump placed 50% tariffs on all imports of aluminum. That included from Canada, by far the largest supplier of primary aluminum in the U.S., says Scott Lincicome, an economic and trade specialist at the Cato Institute.
SCOTT LINCICOME: The president's tariffs caused Canadian aluminum suppliers to look to other destinations, and they started shipping more to Europe and less to the United States.
NORTHAM: Lincicome says the U.S. doesn't make enough aluminum to satisfy domestic demand. So, he says, American producers looked abroad.
LINCICOME: They found Middle Eastern aluminum suppliers, mainly in Bahrain and the UAE, and they started buying more from them and entering into contracts for more Middle Eastern supply. And then boom - a lot of that supply simply can't get out of the Gulf region.
NORTHAM: Strachan with CRU says tariffs and supply shortages means the price of aluminum that goes into cans and cars and many other products has shot up. He says smelters in the Gulf are trying to redirect aluminum overland to other ports outside the Strait of Hormuz.
STRACHAN: Logistically, that is much more difficult, much more expensive, much more time-consuming. And naturally, of course, it's happening at the same time as many other industries are also doing this, and so those ports are getting very busy as well.
NORTHAM: The Trump administration recently recalibrated tariffs for some products made with aluminum, but not the raw metal like that coming from the Gulf. It stays at 50%. Lincicome says it would help U.S. manufacturers and consumers if Trump lifted the aluminum tariffs until the Iran conflict is over.
LINCICOME: A temporary suspension would make all the sense in the world. Allow American manufacturers to bring in the supplies they need at a much lower price, thus boosting their production and inventories, and then slap them back on when the conflict's over.
NORTHAM: It's unclear if a supplier like Canada would want to come back knowing it would only be temporary.
Jackie Northam, NPR News.
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