Colorado’s EV Leadership Faces Aluminum Tariff Challenges


In envisioning America’s future, it’s undeniable that electric vehicles (EVs) will play a pivotal role, offering consumers environmentally-friendly transportation options and aiding the nation in meeting its climate commitments. Colorado, recognizing the significance of EVs, has taken bold steps to become a national leader in promoting their adoption. Recently, state lawmakers passed a landmark $5,000 electric vehicle tax credit, supplementing the existing $7,500 federal tax credit outlined in the Inflation Reduction Act. This move aims to incentivize EV purchases, with an additional $5,000 credit for EVs priced under $80,000 and a further $2,500 credit set to commence in 2024 for EVs priced under $35,000.

Colorado’s proactive stance underscores its unwavering dedication to advancing EV infrastructure and adoption. However, while these policies mark significant progress, addressing critical challenges surrounding aluminum remains imperative. Aluminum stands as the material of choice for many EV manufacturers due to its capacity to enhance vehicle efficiency without compromising performance. Yet, the imposition of Section 232 tariffs in 2018, imposing a substantial 10% tariff on select imported aluminum products, threatens the supply and affordability of aluminum, posing a significant hurdle to EV production.

Despite substantial growth in EV registrations, reaching an astounding 822% increase since 2016, early 2024 has witnessed a plateau in demand. One of the primary impediments continues to be the high purchase price, exacerbated by escalating supply costs, including aluminum. The impact of Section 232 tariffs on aluminum prices has been profound, with official data revealing a staggering 1.6% increase in domestic aluminum prices since 2018. This surge in costs not only burdens EV manufacturers but also constrains aluminum supplies for various downstream industries, exacerbating the challenge.

Addressing this pressing issue is paramount, given the forecasted surge in aluminum usage across the automotive sector. A recent survey conducted among automakers and Tier 1 suppliers suggests a substantial increase in aluminum content per vehicle between 2020 and 2030, driven by the imperative to meet stringent carbon emissions targets. This heightened reliance on aluminum underscores the urgency of resolving tariff-related constraints to ensure the viability of EV production and broader automotive manufacturing.

The automotive industry’s vitality in Colorado further underscores the significance of addressing aluminum tariffs. Supporting approximately 120,000 jobs and contributing nearly $750 million in total state tax revenue, the auto sector serves as a linchpin of the state’s economy. Moreover, other key industries reliant on aluminum, including aerospace, food and beverage packaging, breweries, and defense operations, grapple with the repercussions of tariff-induced supply disruptions, amplifying the urgency for a resolution.

Encouragingly, Congress has recently reintroduced the Congressional Trade Authority Act, presenting an opportunity to roll back aluminum tariffs and mandate Congressional approval for future adjustments to import policies under Section 232. Supporting this legislation is crucial in alleviating the burdens imposed on American aluminum users and consumers alike, fostering a more conducive environment for economic growth and innovation across diverse industries.