Domestic Entities Say China Hampering Downstream Aluminum Production, Urge Broad Action by Commerce
Chinese exports of downstream aluminum products, many of which are used in U.S. military and critical infrastructure applications, have eaten into other companies' market share, and the Trump administration should assess tariffs on all aluminum products in Harmonized Tariff Schedule (HTS) Chapter 76, Economic Policy Institute senior economist Robert Scott told Trump administration officials June 22. During a Commerce Department hearing on the administration’s ongoing review of the national security impacts of aluminum imports and potential responses, Scott recommended that the administration exempt Canadian imports from any trade restraints, and said (here) U.S. and Canadian aluminum could supply virtually the entire U.S. market if necessary. He said trade relief should be “predicated on adjusting for China’s attempt to capture control of the entire value chain” through “massive production subsidies and an export tax on primary aluminum designed to channel cheap inputs into manufacturing downstream aluminum products.”
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Administration officials heard from a range of international officials and domestic and international aluminum manufacturing representatives, among others, during the hearing. Century Aluminum CEO Michael Bless said overall aluminum imports from non-Canadian sources are up by 95 percent since 2012, while U.S. production has decreased more than 60 percent. "The surge in downstream Chinese exports further displaces additional U.S. primary aluminum production," he said. "Thus, it is vital, in our opinion, that broad comprehensive relief benefit the entire value chain."
Representatives of China, the United Arab Emirates, Russia and the trans-Atlantic aluminum supply chain were among those urging caution. China Commerce Ministry Export Division One Director Li Xie said U.S.-produced aluminum is capable of meeting U.S. national security needs. He added that most aluminum imports from China flow to products for generally civilian usage, such as roofing, road signs and consumer durables. He also said that any abusive national security-based trade actions would violate the World Trade Organization legal framework.
Talal al-Kaissi, senior adviser for commercial affairs for the trade office at the UAE Embassy in Washington, said the U.S. should consider WTO rules on under what conditions WTO members may lawfully restrict trade. Al-Kaissi also noted that UAE primary aluminum contributes substantially to U.S. downstream manufacturing, and noted that the two nations have cooperated in several military actions, including 2011 operations in Libya and the first Gulf War.
High energy and labor costs, as well as the growth of secondary aluminum products and production, are forcing the closure of U.S. aluminum smelters, not imports from Russia, Iurii Stegnii, deputy trade representative of Russia’s trade office in the U.S., said during the hearing. “We would like to emphasize that without imports, there would be a massive shortage of aluminum,” Stegnii said. “Raw materials are required in the U.S. market and all sectors in U.S. industry.”
U.S., Canadian and European aluminum industries are interlinked, and no unfair competition between those regions’ sectors exists, the American Aluminum Association, European Aluminum and the Aluminum Association of Canada said in a joint statement (here) for the hearing. They pointed to Chinese excess capacity as the root cause of challenges faced by North American and European aluminum industries. “We urge our governments not to hamper the positive effects that trade and cooperation can bring among companies in our regions,” the groups wrote. “We believe that with the right monitoring tools, a negotiated solution to this global challenge will benefit all aluminium producers and consumers worldwide.”
Representatives of the Flexible Packaging Association (FPA) and the Can Manufacturers Institute also urged caution during the review. FPA CEO Alison Keane said (here) aluminum foil imports should be excluded from consideration, as they don’t have any application to national security. She added that trade restraints against aluminum foil would impinge U.S. flexible packaging manufacturers’ ability to compete with foreign companies that don’t have similar restraints, hurting an industry that employs more than 80,000 Americans. Moreover, aluminum can sheets and aluminum ingot, which are used to make drink cans, aren’t a national security risk, and tariffs on those products could increase the cost of aluminum beverage cans in the U.S., the Can Manufacturers Institute said in a statement (here). “With these concerns in mind, CMI urged the U.S. Department of Commerce to exempt aluminum can sheet used to make beverage containers and other aluminum products from any tariff or other trade action.”