Last week, a few leading downstream aluminium producers urged the Trump administration to remove the tariffs as they could not stop Chinese overcapacity. Top industry executives including JW Aluminum CEO Lee McCarter said that despite the tariffs, it’s still cheaper for U.S. manufacturers to buy imported aluminium than buying domestically. The tariffs, according to them have only made domestic products more expensive and uncompetitive.
They have also opposed the import quota system proposed by the government for Canada and Mexico in lieu of tariffs and said that that will create a deficit for aluminium for US downstream buyers.
“Unfortunately, the tariffs have done nothing so far to stop China’s trade-distorting behaviour in the market,” said Jean-Marc Germain, CEO of Constellium, which makes rolled aluminium at 24 sites in North America, Europe and Asia.
“What it does is increase the cost of our products,” he added.
He indicated the six per cent growth in aluminium production in China and the following growth in export despite the implementation of tariffs.
As shown by a study by a Paris-based Organization for Economic Cooperation and Development, government subsidies to the aluminium industry in China were worth US$70 billion over the last five years. Another study by George Mason University shows U.S. importers have obtained tariff waivers on 86 per cent of the products indicating the futility of the tariffs.
Aluminum executives are of the opinion that the White House should focus on negotiating with China over its overcapacity and not on tariffs and quotas for its trusted trading allies like Mexico and Canada.
“Our country’s ability to produce thin-gauge foil has been severely impacted by China over the last 15 years,” said JW Aluminum CEO Lee McCarter, whose plant makes flat-rolled aluminium products.
He is also concerned over Trump’s indication about closing US-Mexico border as most of its products are shipped to Mexico for assembling and then they enter the US as finished products.
He however applauds the growing use of recycled aluminium in the US. JW Aluminum is in the middle of a US$300 million expansion that will add 50 jobs and increase capacity by 175 million pounds. The company plans to use 100 per cent recycled aluminium once the Goose Creek facility expansion is complete.
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