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AEC Testifies U.S. Aluminum Extruders Disadvantaged by Exclusion Process

© by Aluminum Extruders Council

Last week, the Aluminum Extruders Council (AEC) provided testimony in the U.S. International Trade Commission (USITC) hearing regarding the economic impact of Section 232 and Section 301 Tariffs on U.S. industries. AEC president Jeff Henderson spoke on behalf of the nearly 60 domestic AEC aluminum extrusion member companies that currently operate hundreds of extrusion presses across 35 states, recommending that the Section 232 process for aluminum be restructured.

In Henderson’s testimony, he explained that due to the high cost of primary aluminum, the U.S. industry is still at a severe disadvantage compared to imported aluminum extrusions. Additionally, there is no protection from these imported extrusions. The share of the U.S. market has shrunk from 80% to 75% since the 232 aluminum extrusion tariffs were revoked, which translates to 300 million lbs of extrusions — the equivalent of eight extrusion plants or 2,000 direct jobs.

“Despite some initial relief for the domestic extrusion industry from the Aluminum Section 232 tariffs for imported aluminum extrusions, the structure of the exclusions process later developed by the U.S. Department of Commerce, including the adoption of General Approved Exclusions (GAE) that do not require product-specific objections, has effectively gutted any relief for U.S. extruders from imports of extrusions the Aluminum 232 initially provided,” Henderson said. “The AEC is advocating for an immediate restructuring of Commerce’s Aluminum 232 exclusions process to remove the GAE applicable to imported extrusions, otherwise the Aluminum 232 utterly fails to protect domestic extruders from foreign manufacturers.”

According to the AEC, the structure of the existing Aluminum 232 exclusion process does not reflect the commercial realities of demand and production in the U.S. aluminum extrusion market. As a practical matter, this structure effectively renders it impossible for U.S. extruders to object to exclusion requests, and negates any benefits they should be receiving.

Fatally Flawed Presumption

With as many as five million different extrusion designs currently in production, custom extrusion shapes make up approximately 90% of all extrusion production in the U.S.  Since every exclusion request refers to a unique shape, it is essentially never the case that a U.S. extruder will already have the specific tooling on hand necessary to produce that specific shape. As a result, the structure of the current exclusion process effectively renders it impossible for U.S. extruders to object to almost any exclusion request. To be clear, while a U.S. extruder may not have the specific necessary tooling for a unique extrusion shape in advance/in inventory, that in no way means that a U.S. extruder cannot produce the specified extrusion in a timely manner.

Consequently, Commerce created a situation in which U.S. extruders could not object to extrusion exclusion requests, thereby justifying Commerce’s implementation of the GAE. Thus, Commerce’s presumption to grant GAEs that cover essentially the entire scope of aluminum extrusions rests solely on a fatally flawed presumption embedded in the exclusion process. Unfortunately, the implementation of the GAEs resulted in the highest level of aluminum imports since 2010 when the aluminum extrusion industry first launched their antidumping (AD) and countervailing duties (CVD) cases against Chinese imported aluminum extrusions (at the time China dominated 20% of the U.S. extrusions market).

U.S. extruders continue to face growing foreign competition despite the AD and countervailing duties CVD orders in place for aluminum extrusions from China. Four key factors in the continued threat from imports are:

  1. China’s persistent overcapacity problem.
  2. Chinese evasion of the AD and CVD orders through transshipment and other evasion schemes.
  3. The structure of the existing Section 232 exclusion process makes it very difficult for domestic aluminum extrusion companies to participate.
  4. The essential gutting of Section 232 relief for the extrusion industry due to the structure of the exclusion process and GAEs as operated by Commerce.

The Midwest Premiums hit highs since the Aluminum 232 tariffs were imposed, and aluminum process and billet premiums in the U.S. hit highs in 2022 — all of which conspired to make U.S. aluminum extruders easy targets for foreign competitors. Henderson noted that this means that “unfair foreign competition is benefiting from both cheaper aluminum inputs and from blanket tariff exclusions in the form of GAEs — essentially negating the intent of the AD and CVD orders and the Aluminum 232 tariffs to protect the critical U.S. aluminum extrusion industry.”

Henderson concluded with the request that “the Commission recommend that the Aluminum 232 exclusions process be restructured to remove the GAE for aluminum extrusions, and that the exclusion process for aluminum extrusions going forward be amended to reflect the commercial realities of the aluminum extrusions industry and market.”

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