how do I set the aspect ratio

You can’t. The 16:9 aspect ratio of iMovie is fixed and cannot be changed. Clips recorded in a different aspect ratio will either be cropped to fit the 16:9 screen dimensions, or black bars will be added to make it fit the screen.

— Rich

After you finish the movie in iMovie, you can crop it to any aspect ratio in Photos for Mac, if you import it to Photos. However, this is only possible since Photos 6 on macOS 11. Which system version is running on your Mac?

See the paragraph on cropping and straightening on this help page: Change and enhance a video in Photos on Mac - Apple Support

You can also export and then reimport your final movie back into a new iMovie project. From there you can manually crop it in the Project Media media browser view to any aspect ratio that you want. You would need to eyeball it since there are no crop settings. Then export it out and remove the black bars as necessary by playing it in QuickTimePlayer and using Control-Shift-5 to drag-select and record the dimensions of the movie that you want, thus eliminating the black bars.

-- Rich

You are very welcome.

You can get rid of the black bars in the final product by doing a screen recording and cropping out the bars.

— Rich

Hi, léonie,

That's good info. I'm using Photos 4 and no crop feature for videos there. So good to know that Apple has finally added it in Photos 6.

-- Rich