Industry executives are warning that U.S. President Donald Trump's recent 50% tariffs on aluminum imports may be too much for consumers to swallow and could destroy demand.

"We're concerned about the potential demand destruction" of the levies, especially at current levels, Derek Prichett, senior vice president of global metals at Novelis Inc., said at the 17th Harbor Aluminum summit in Chicago.

"Overall, it's a drag," Prichett said, adding that his company's Canadian-U.S. operations have been particularly affected by the tariffs. The Atlanta, Georgia-based company is the largest maker of flat-rolled aluminum products used in a variety of industries, including automotive and aerospace.

Trump has said the tariffs are necessary to protect domestic producers' profit margins and spur investment in U.S. manufacturing. But the U.S. is heavily dependent on imports to make everything from beverage cans to cars and airplanes.

Read More: Trump Signs Order Doubling U.S. Steel, Aluminum Tariffs to 50%

Many executives say manufacturers may not be able to absorb the high level of levies, which Trump doubled from 25% earlier this year. The levies, they say, will make products more expensive for Americans. Hisham Alkooheji, chief marketing officer at Aluminum Bahrain BSC, called the 50% tariffs — which take effect June 4 — a "real tipping point" because it will be difficult to pass on the cost to consumers.

Trump's aggressive and ever-changing tariff moves have also led to increased volatility in the metals market. After Trump's tariff doubling announcement Friday, contracts tied to the price producers pay to ship aluminum to the Midwest jumped 54% to their highest since 2013 on the Comex in New York on Monday and were trading near that level on Wednesday. (alg)

Source: Bloomberg