Time for Action on China's Overcapacity | The Aluminum Association

Time for Action on China's Overcapacity

Let's Get the Job Done
 

 

The U.S. aluminum industry is growing – creating American jobs and committing or investing more than $3 billion in new plants and expansions since 2013. However, many segments of the industry continue to face significant headwinds thanks to massive, unfairly subsidized aluminum overcapacity in China.   

The U.S. is a deficit market for aluminum, meaning it consumes far more new, or “primary,” metal than it is able to produce domestically. Consequently, the vast majority of U.S. aluminum industry jobs rely on a steady mix of domestic and imported aluminum. This metal feeds into a diverse manufacturing supply chain – enabling American workers to fabricate aluminum products like sheet for a car hood or beverage can, extrusions for a window frame or a forging for an aircraft fuselage. These mid- and downstream aluminum production workers account for 97 percent of the U.S. aluminum industry workforce.

Since the U.S. relies on access to imports to support growth, across-the-board tariffs – like the 10 percent “Section 232” tariffs on most aluminum imports into the United States – are counterproductive. The Trump administration’s decision in May 2019 to exempt Canada and Mexico from the Section 232 tariffs was a significant step in the right direction and a major win for the industry.  

Instead of across-the-board import restrictions, the Aluminum Association favors a targeted approach to trade enforcement that focuses on addressing the fundamental problem in the marketplace: systemic, subsidized aluminum overcapacity in China.  

A January 2019 report by the Organization for Economic Cooperation and Development (OECD) documented massive subsidies for Chinese aluminum producers. Of the $70 billion of global government support cited in the study over the past 5 years, fully 85 percent went to five aluminum-producing firms in China.

Click here to see what policymakers on both sides of the aisle have said about the need for action on Chinese overcapacity.

With Section 232 tariffs removed for our vital North American trading partners, now is the time for President Trump and his trade team to lead a coalition to push back on China's unfair industrial policies, including unfair government subsidies that lead to excess capacity in the market.

The Aluminum Association's Approach

The Aluminum Association is the leading advocacy voice for the U.S. aluminum industry, representing the full aluminum value chain, from primary producers to value-added aluminum processors to recyclers to suppliers to the industry. Since the Section 232 tariffs were announced in March 2018, the Aluminum Association has worked with members to share the domestic industry’s views with the administration and policymakers.

The Aluminum Association is calling for:

  • Permanent, quota-free Section 232 tariff exemptions for all countries designated by the Commerce Department as market economies;

  • Improve Section 232 tariff exclusion process to reduce administrative burden on companies and increase tracking and analysis recognizing market realities;  

  • The creation of an aluminum import monitoring system to ensure that no unfairly traded metal is entering the United States;

  • A continued tough stance on trade enforcement through targeted antidumping and countervailing duty actions on products benefiting from unfair government subsidies;

  • Joint action from global political leaders to set new, more effective trade rules on subsidies and state-owned enterprises (SOEs) that put an end to such distortive practices;

  • A government-to-government negotiated agreement with China to address the trade distorting practices that drive its structural aluminum overcapacity.

While effective trade policy is necessary for a thriving and competitive U.S. aluminum industry, it is far from sufficient. That’s why the Aluminum Association recently released the Aluminum Agenda, a comprehensive policy roadmap laying out goals for a sustainable industry on trade, environment, infrastructure, energy and workforce issues. 

Visit Getting Trade Right to learn more about the Chinese overcapacity and the steps the Aluminum Association has taken and continues to take to address this consistent threat.

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