By Katherine Hamilton

Alcoa shares fell after the company said it expects higher tariffs on aluminum to create a $100 million headwind on annual earnings.

The stock was down 6% to $23.61 on Thursday following its first-quarter earnings report. Shares have dropped 39% in the past three months and last week hit a 52-week low of $21.53.

"The tariff math is the tariff math," B. Riley analyst Nick Giles said. "The stock has been pressured by the negative impact of tariffs."

The Pittsburgh aluminum producer said 25% tariffs on aluminum, which increased from 10% in mid-March, are resulting in higher costs. About 70% of Alcoa's aluminum produced in Canada is sold to U.S. customers and will be hit with higher trade duties, management said Wednesday. The company anticipates tariffs will add $105 million in quarterly expenses, totaling $400 million to $425 million a year.

That anticipated cost will be somewhat offset by higher aluminum prices in the U.S., Alcoa said. U.S. aluminum prices have increased with the introduction of tariffs and are predicted to keep rising. Alcoa expects higher prices will bring the annual net negative cost from tariffs down to around $100 million.

But the quarterly hit was meaningfully higher than prior indications, J.P. Morgan analyst Bill Peterson said in a note. On a per-share basis, Peterson expects tariff-related costs to translate to an $8 to $10 impact for stockholders.

Beyond just tariffs, aluminum demand usually correlates with economic growth, Giles said. Broader concerns about economic uncertainty or a downturn are also worrying investors.

"People are concerned about demand," Giles said. "There's a recession overhang, as well."

Write to Katherine Hamilton at katherine.hamilton@wsj.com

(END) Dow Jones Newswires

April 17, 2025 14:33 ET (18:33 GMT)

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