An Oklahoma Aluminum Plant Says a Lot About Industrial Real Estate and Tariffs

In late January, Emirates Global Aluminum and Century Aluminum Company — two of the country’s largest producers of primary aluminum, the raw material at the core of the finished metal — announced they had agreed to build a new aluminum production plant in the port city of Inola, Okla. It’s set to be the first primary production plant built in the U.S. since 1980.

The smeltery, located on a 437.5-acre plot of land, is expected to produce 750,000 tons of aluminum annually and more than double current U.S. production, as well as create 1,000 permanent jobs and 4,000 additional jobs during construction. Construction of the project is set to begin by the end of this year, with aluminum production slated to start at the end of the decade.

The Inola facility fits into a larger narrative about tariffs and onshoring and their effects on industrial real estate. That’s all the more true following the Feb. 20 U.S. Supreme Court decision striking down President Donald Trump’s more expansive tariffs, which he quickly replaced with temporary narrower ones. The high court’s ruling did not affect a 50 percent duty on steel, aluminum and copper — vital materials for the industrial market to sustain production in the U.S.

“Oklahoma is the center of the country, and that is a huge advantage from a distribution standpoint,” said John Budd, CEO of the Oklahoma Department of Commerce. “We have the workforce and the site. We have good energy availability and economics, and we also just have great logistics coming out of Oklahoma. We see [this project] enhancing our ability to compete for business in critical minerals and also to support an overall U.S. strategy of bringing manufacturing back onshore.”

Global engineering, construction and management company Bechtel was tapped as the engineering firm for the Inola project, which is negotiating a long-term electricity supply agreement to provide 1.2 gigawatts of uninterrupted power for the plant for 30 years.

U.S. Aluminum Company also signed an agreement with the project’s developers to potentially develop an aluminum fabrication plant near the new smeltery, which would turn liquid aluminum into products for the electrical, defense, aerospace, automotive and machinery industries. (The developers were not available for further comment.)

“It should be good for the economy, and I think it is evidence that President Trump’s tariffs are at least partly working,” said Mollie Sitkowski, a partner at law firm Faegre Drinker who specializes in trade compliance.

One of Trump’s stated goals in imposing global tariffs back in April — which included making the U.S. “rich as hell” — was onshoring manufacturing back to the U.S.

American factories have been in a slump for most of the past year, with U.S. manufacturers shedding about 8,000 jobs in December alone and 108,000 jobs in all of 2025. However, this Oklahoma project — the first U.S.-based primary production plant in more than 45 years — might be a guiding light for more local manufacturing and the industrial real estate market, sectors that have shown signs of improvement in the past year.

The U.S. industrial market saw renewed leasing, increased investment sales and a number of expiring leases in 2025. Net absorption for U.S. industrial hit 62 million square feet in the fourth quarter of 2025, the asset class’ strongest quarterly performance in two years, while investment sales hit $104 billion in the period, an increase of 12 percent year-over-year, according to a recent report from Newmark.

“We overall do see absorption,” said Gregory Healy, executive vice president and head of industrial services for North America at Savills. “This idea that you need to have it right now because of political risk [is helping]. So, even if it’s not manufacturing growth, you’re still seeing growth in industrial because of uncertainty.”

The team behind the project in Oklahoma jumped on that bandwagon, seeing both an opportunity for an investment amid all the uncertainty and a demand for more domestic production.

“[The project] is evocative of the need for national security reasons and economic independence reasons for us to bring more of our manufacturing jobs onshore,” Budd said. “For decades, more and more manufacturing has been moved overseas, and there’s always going to be some of that, but securing some production here locally will be beneficial in terms of driving our industry.”

The Oklahoma plant could also create a lot of competition from U.S. businesses that want to avoid a foreign import tax by sourcing domestically.

“They are probably going to be a big exporter, because now there’s a competitive reason to use U.S. small-cast aluminum in that you’re avoiding 50 percent tariffs,” Sitkowski said. “It’s a big deal to have another option of U.S. aluminum in the global market for everyone else to use.”

It’s also just good news overall for the country’s aluminum smelting industry. The roughly 670,000 tons of aluminum currently produced in the U.S. is far below the 3 million tons produced in recent years, meaning the country has recently been reliant on importing around 45 to 50 percent of primary aluminum, according to Derek Lemke, senior vice president of product-level intelligence at supply chain technology provider Exiger.

“While geopolitical tensions have risen across the globe, [this Inola] investment was done not just because of the tariffs. It was done because, materially, this is going to make our supply chains more resilient,” said Lemke, who leads Exiger’s supply chain visibility, transformation and risk management solutions. “At the end of the day, we’re reducing our direct net import reliance. We’re building jobs within North America. We’re supporting our key industries with key inputs that are needed.”

Plus, a project like this has been a long time coming.

“The administration’s goal of the tariffs was to create investment incentives for these types of new infrastructure projects,” Nick Baker, managing director of the transfer pricing practice at consultancy Kroll, said of building domestically. “It’s been cost prohibitive, mostly from an energy perspective. It’s energy intensive. You have to generate a lot of heat. You have to be co-located to strong, reliable, high-output energy production.

“Now energy costs are low. Demand for the material and downstream products is higher, and there’s a supply gap,” Baker added. “These investors did the economics on that, and they said, ‘OK, this business case finally makes sense.’”

It will likely take until the end of the decade for the aluminum production plant in Inola to be built, but developers and analysts alike are hopeful that its output might reduce the price of aluminum, especially after tariffs caused material and consumer prices to jump and flipped many businesses upside down.

“In general, I think we’ll see a reduction in some of the material cost uncertainty which tariffs produce,” Healy said. “The inputs increased in cost, and obviously that changed the dynamics and the cost to build a new industrial site. So I think it’s a good thing for [the tariffs] to be deemed illegal, because it’s reducing that upward pressure.

“In general, prices rise like a brick and fall like a feather,” Healy added. “So, I think, over time, construction inflationary pressures could soften.”

The Feb. 20 tariff ruling will also be a relief to many U.S. port cities, as the tariffs caused a significant slowdown in demand for both imports and exports as uncertainty grew. Some major ports reported drops in shipping activity ranging from 15 percent to as high as 50 percent in 2025 following Trump’s so-called “Liberation Day” in April. Los Angeles’ cargo volume dropped 35 percent during the height of the tariff implementation, while volume in Portland, Ore., dropped 50 percent.

“Tariffs were definitely tamping down on demand by increasing pricing, and this should alleviate some of that lagging demand that the tariffs were causing,” said David Greek, managing partner at Greek Real Estate Partners, which manages industrial properties across New Jersey, Pennsylvania and New York. “So this will be good for any major port in the U.S.”

And, while the Oklahoma plant is good news for businesses looking to source materials within the country, the actual building of the plant will require a lot of materials of its own — and a lot of those materials will face their own tariffs.

“To build an aluminum facility, it’s going to take furnaces, it’s going to take utilities, it’s going to take structure, it’s going to take literally moving dirt, it’s going to take man hours,” Baker said. “A lot of that is going to be sourced from overseas.”

Roughly 20 percent of the capital equipment and materials that Emirates Global Aluminum and Century Aluminum Company will import for the project will come from overseas, according to construction lawyer Barry LePatner. The smeltery is attractive in the sense that it will onshore manufacturing, but the cost of producing a development like this will be extremely high, especially considering electrical costs, he added.

“The cost of these factories are going up, so that means eventually it gets passed on to the product pricing itself,” LePatner said. “The long-term viability of a plant like this depends heavily on electricity pricing, which is a function of a higher cost for aluminum and other products. Tariffs are likely going to increase the value for the domestic aluminum produced, but they’re also going to increase the cost of building the plant, as a capital cost.”

The Supreme Court’s ruling voiding Trump’s steeper tariffs might also harm major industrial projects like the one in Inola. The protectionist trade policy underlying the tariffs helped to shield domestic industries from foreign competition, allowing the Inola project to gain market share and establish visibility — something the project’s backers had planned their strategy around.

“For markets like the Midwest, where you were seeing some resurgence in manufacturing, and particularly commodity-type manufacturing like aluminum or steel, those are certainly going to be damaged by this [court decision],” Greek said. “Their entire business plan was based on protectionist trade policy. The less protectionist the trade policy becomes, the less successful those projects will be.

“The aluminum plant out in the Midwest is a perfect example of the people and the projects that are going to be hurt most by this ruling — those that were proactive in trying to bring some of that manufacturing home early,” he added.

No matter what new tools Trump decides to use for his tariffs — who knew there were so many emergency trade powers vested in the presidency? — the U.S. industrial real estate industry at large seems to remain hesitant to make deals among the political uncertainty. That makes the Inola project as much an outlier in the onshoring trend as an exemplifier.

“The administration has been all over the lot,” LePatner said. “They’ve backpedaled, they’ve moved forward. They’ve raised prices, they’ve lowered prices. They’ve negotiated day-by-day on different prices. That’s hurting companies.”

Further changes in trade policy will likely add to the uncertainty in the industrial real estate market. Trump’s latest tariffs after the Feb. 20 ruling are likely to face legal challenges. Plus, companies hit with the earlier higher tariffs are moving to reclaim the import taxes they paid. 

“I think what some people were expecting is a clear process for what happens for imports tomorrow,” Kroll’s Baker said. “And that just wasn’t really the Supreme Court’s charge. It’s going to take months to unwind the financial implications, as well as how this is going to impact supply chain shifts.”

Meanwhile, onshoring plans such as those unfolding so dramatically in Oklahoma continue in fits and starts elsewhere. 

“I think what we saw during the second half of last year in particular was some importers getting comfortable with the new trade environment,” Greek said. “And, even though there was still quite a bit of uncertainty about what the long-term policy looked like, most companies were getting comfortable doing business and figuring out a way to push through it.”

But Greek said that maybe some of the alternative tools the administration will explore for the tariffs could be a good thing.

“They’ve been using the stick a lot. The stick is tariffs, increasing costs for importers,” Greek said. “But I think now, this kind of forces their hand to maybe use a bit more of a carrot when trying to entice some of those national security critical supply chains to come back home, and that probably should have been part of the solution to begin with, in my opinion.

“Maybe this actually helps the White House be a little more successful in that endeavor,” he added, “because they’re going to be forced to use tools that they haven’t used previously.”

Isabelle Durso can be reached at idurso@commercialobserver.com.