Yesterday, President Trump signed proclamations to formally adjust the tariffs on aluminum (10%), stating national security as a major reason for their implementation under Section 232. These tariffs will go into effect 15 days from this signing. Canada and Mexico are temporarily exempt from the tariffs, depending on the outcome of NAFTA negotiations. Other countries will also have an opportunity to appeal for exemptions.
The proclamations define “aluminum articles” tariff schedule as:
- (a) unwrought aluminum (HTS 7601)
- (b) aluminum bars, rods, and profiles (HTS 7604)
- (c) aluminum wire (HTS 7605)
- (d) aluminum plate, sheet, strip, and foil (flat rolled products) (HTS 7606 and 7607)
- (e) aluminum tubes and pipes and tube and pipe fitting (HTS 7608 and 7609)
- (f) aluminum castings and forgings (HTS 7618.104.22.168 and 7622.214.171.124)
Aluminum industry organizations both in the U.S. and abroad have largely expressed concerns on the impact of broadly applied tariffs, asking the government to shift the focus to over capacity in China.
The Aluminum Association urged the administration to exempt other key trading partners and noted that a more targeted approach to the tariffs would protect vital supply chains for the 97% of U.S. aluminum mid and downstream manufacturing. “The president’s decision represents an opportunity to engage our critical trading partners on addressing persistent Chinese aluminum overcapacity,” said Heidi Brock, president and CEO of the Aluminum Association. “Now is the time to negotiate a long-term, enforceable agreement with China that tackles this perennial problem once and for all.”
Jean Simard, president and CEO of the Aluminium Association of Canada (AAC), stated, “This is a positive step from the American administration and recognizes Canada’s strategic role in the North American supply base. The goal remains to get a full exemption and we shall employ ourselves over the next weeks, together with our Canadian and Quebec governments and our U.S. allies, to find a pathway towards a full and permanent exemption.”
European Aluminium stated that it was confident the EU Commission would do everything it can to exempt European countries from the 10% U.S. tariff in the next 15 days, but requested immediate market surveillance and the implementation of safeguard measures if proven necessary. “We are deeply concerned about the U.S. decision to impose a 10% tariff on all aluminium products from Europe (EU+EFTA),” commented Gerd Götz, director general of European Aluminium. “As a long-standing political ally with strongly interlinked aluminium value chains and numerous multinationals operating on both territories, Europe should have been exempted from the tariff. If the tariff comes into force, it will greatly damage our trading relationship with the U.S. The EU currently exports 1.2 billion euro of direct aluminium products to the U.S., shares many industrial clusters, innovation hubs and transatlantic synergies.”
However, some U.S. companies are in support of the tariffs decision. Michael Bless, CEO of Century aluminum believes that this decision will be “extraordinary” for business, as the smelter will be able to add 300 jobs and invest over $100 million to restart production and upgrade technology at the Hawesville, Kentucky smelter.
Craig Bouchard, founder and CEO of Braidy Industries (which is currently constructing a greenfield aluminum rolling mill in Kentucky to produce sheet and plate for the automotive and aerospace industries), has also showed support. “Our costs will go up a little. This is ok,” Bouchardtold WDRB News. “The potential effect on jobs across America may far exceed our increased costs.” He further added, “My prediction: You will soon see foreign companies reacting to the tariffs by building new plants in the United States. The aluminum smelting industry could be one example. Foreign companies will do so in return for negotiated exemption to the tariffs.”
Edited to Add (3/10/2018): Australia will be exempt from the aluminum and steel tariffs.