Aluminum Association statement on 50% Section 232 aluminium tariffs

Aluminum Association President & CEO Charles Johnson issued the following statement in response the Trump administration’s decision to increase Section 232 aluminium tariffs from 25 per cent to 50 per cent: 

“Re-establishing a more level playing field for domestic producers is critical but a Section 232 tariff of 50 per cent threatens to undermine the very industry the administration aims to support. The Aluminum Association, which represents the full industry supply chain and 70 per cent of domestic production, urges the administration to reconsider today's decision given the negative impact it will have on manufacturers.  

 Aluminium and steel are fundamentally different metals with distinct supply chains, market dynamics and strategic challenges. A one-size-fits-all approach to trade policy for these strategic materials risks unintended consequences for the U.S. economy and our national defence. Critically, a 50 per cent tariff rate could also raise prices for consumers, decrease demand and undermine the aluminium industry’s ability to serve the U.S. defence industrial base. Aluminium firms need a reliable supply of metal, protection from transhipped metal from non-market economies, and certainty in the tariff landscape. 

 The industry appreciates the Trump administration’s focus on bringing more aluminium production and jobs back to the United States and remain committed to supporting these goals. We look forward to working closely with the administration to clearly articulate industry concerns related to Section 232 tariffs and provide alternative actions that will better support the future growth of the U.S. aluminium industry.” 

Also Read: Europe’s primary aluminium output in first four months tracks last year’s rhythm, only volumes varied

 US Aluminium Industry Backgrounder 

Jobs & Impact 

Today, the U.S. aluminium industry: 

• Directly employs more than 164,000 workers and indirectly supports an additional 535,000 workers. 
• Directly generates more than $92 billion in economic output and indirectly generates an additional $136 billion in economic output. 
• Supports nearly 700,000 direct, indirect and induced jobs and more than $228 billion in economic output. 
• Committed or invested more than $10 billion in domestic manufacturing since 2016. 

 Market Reality 

The U.S. aluminium industry looks very different today than it did 25 years ago, but it continues to pursue generational investment.  Since 2000: 

• Operating U.S. primary aluminium smelters declined from 24 to 4 today due to lack of low-cost domestic electricity and unfair trade practices in China 
• North America went from producing the most primary aluminium on earth to 4th place today with output dwarfed by China 
• Demand for aluminium grew consistently as the U.S. industry evolved and shifted its business mid-and-downstream 
• Domestic aluminium recycling grew by ~1/3 and now accounts for ~85 per cent of U.S.-made aluminium 
• Nearly 98 per cent of all U.S. aluminium jobs today are in mid-and-downstream processing and recycling. 
• Despite a ~70 per cent decline in primary aluminium jobs since 2013, overall industry jobs have held steady as employment shifted downstream and certain industry segments have seen record job growth. Strong trade enforcement including Section 232, Section 301 and antidumping/countervailing duty tariff interventions during the first Trump administration supported this growth.
• Today, about two-thirds of the primary aluminium the U.S. uses comes from Canada because we don’t have nearly enough domestic capacity or energy supply to meet demand.
• The industry wants to build more smelters in the United States but that would take time (5 – 6 years), significant capital investment ($4 - $6 billion/facility) and long-term, competitive power contracts for annual electricity use equivalent to the city of Boston or Nashville.

 Critical Mineral for National Security 

• The aluminium industry is an essential element for U.S. economic and national security. 
• Aluminium is one of only 11 mineral commodities included on every government critical materials list.  
• The Department of Defence recognises aluminium as essential to the military industrial base; the Department of Energy recognises aluminium as critical to the U.S. energy supply chain; and the United States Geological Service recognises aluminium for its integration into the nation’s technology and economy. 
• Aluminium supports the American warfighter. It’s used in less obvious applications like fighter jets, body armour, transmission lines and building materials. 

China’s Growing Impact 

• China’s subsidised overcapacity remains the fundamental challenge facing the industry. 
• An OECD report found that 85 per cent of the $70 billion in global aluminium subsidies from 2013 – 2017 went to just five Chinese-owned firms. 
• Subsidies peaked in 2009, when ~14 per cent of the revenue of Chinese aluminium firms came from government support.  
• Even today, ~4 per cent of revenue from Chinese aluminium firms comes from state subsidies, compared to ~1 per cent in the rest of the world. 

China’s growing market dominance: 

• Creates over-reliance on Chinese supply chains, threatening national security 
• Reduces returns and growth opportunities in the rest of the world 
• Threatens jobs in strategically critical industrial sectors 
• Increases global emissions in the sector due to heavy reliance on coal-fired power 

The U.S. aluminium industry can compete with China on a level playing field – but not with the Chinese government. 

Also Read: 190% surge in US premium - how are the US market and consumers reacting to it?

Note: This article has been issued by The Aluminum Association and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.