U.S. Aluminum Associations Voice Concerns over Tariffs

Glass Magazine
June 6, 2018
COMMERCIAL, RETAIL, FABRICATION

Officials from two leading U.S. aluminum trade organizations said the recently enacted tariffs on metal products could affect the supply chain and disrupt the domestic industry.

On May 31, President Trump issued proclamations ending the exemptions from tariffs—10 percent on imported aluminum, and 25 percent on imported steel—for Mexico, Canada and the European Union. The proclamation also replaced tariffs on Argentina’s aluminum imports, as well as Argentina and Brazil’s steel imports, with quotas.

These most recent measures are the latest of the restrictions placed on foreign metal imports, resulting from President Trump’s initial proclamation on March 8 that imposed duties on steel and aluminum articles under Section 232 of the Trade Expansion Act. Currently, Argentina, Australia, Brazil and South Korea have been exempted from steel tariffs, and Argentina and Australia have been exempted from aluminum tariffs. In March, South Korea negotiated to replace the steel tariff with a product-specific quota, but will still be subject to the 10-percent aluminum tariff.

Jeff Henderson, president of the Aluminum Extruders Council, criticized the newly enacted tariffs, saying they were in no way a positive development for the industry or economy. “It feels like it’s going to be chaos, it’s going to be disruptive,” he says. According to Henderson, some in the industry have reported postponement of construction projects due to uncertainty about metal supply and costs. “Some of those big projects, the numbers may not work anymore,” he says.

Matt Meenan, senior director of public affairs for the Aluminum Association, expressed the Association’s concerns regarding the effects of the tariffs. “Our concern is that across-the-board tariffs could disrupt supply chains, raise cost and increase uncertainty within the aluminum industry,” says Meenan. “In the mid-term, tariffs and quotas could also have a chilling effect on industry investment and demand—particularly in mid-and-downstream aluminum production and processing, sectors which account for 97 percent of U.S. aluminum industry jobs.”

Henderson is asking for greater accountability on the part of domestic primary aluminum producers in communicating with the supply chain. “[The United States] was going to go into the aluminum producing industry, so when are we going to start seeing tonnage of billet, slab and ingot?” asks Henderson. “I thought we would have heard about plants opening or breaking ground by now, but nothing,” he says.

Meenan also calls for a realistic assessment of the U.S,’s current smelting capacity. “Even if all U.S. smelters were up and running today, we’d still have less than half the primary aluminum supply that we used in 2017,” he says. “The U.S. produces less than 1 million metric tons of primary aluminum; our total capacity is less than 2 million metric tons; and we consume between 5-6 million metric tons of primary each year. Building new smelters is a time-and capital-intensive process and we can’t resolve these issues overnight.”

While the market remains uncertain, Henderson says that communication with industry partners is key. “I’ve been through a lot of boom/busts, and it’s important for the supply chain to be open and transparent.” Henderson advises manufacturers to be patient with aluminum extruders as the latter deal with the uncertainty in the market. “Just try to get through this as business partners,” says Henderson.

Review tariff and quota information and updates on the U.S. Customs and Border Protection website.