The U.S. aluminum industry is part of a highly competitive global commodity marketplace. To compete on a fair and level playing field, the industry relies on a rules-based trading system and robust trade enforcement.
Smart trade policy is essential to the future of U.S. aluminum.
Aluminum Trade Agenda
As a globally traded commodity, U.S. aluminum relies on a rules-based system and strong trade enforcement to compete on a level playing field. In recent years, the Aluminum Association has successfully pursued a number of trade enforcement actions under existing antidumping and countervailing duty (AD/CVD) laws to address unfairly traded aluminum imports that injured domestic producers. These outcomes have shored up U.S. operations in these business lines and spurred investment. More recently, Aluminum Association efforts led to a bipartisan agreement in Congress to create and fund the Aluminum Import Monitoring (AIM) system, a key tool to monitor trade flows and enhance enforcement activity. U.S. aluminum companies have competed successfully in the global marketplace for more than a century. But the industry cannot — and will not — compete against state governments and firms that violate global trading rules.
The Aluminum Association supports:
- Continued robust trade enforcement: The U.S. government should use all available tools to fully enforce existing trade rules, including AD/CVD orders and mechanisms within trade agreements like the U.S.-Mexico-Canada Agreement (USMCA). Targeted, durable trade remedies can effectively curb unfair imports – both in the United States and elsewhere. Our trading partners should take appropriate trade remedy action and/or implement safeguard measures to address unfairly traded aluminum imports within their borders. The industry also supports improvements to existing AD/CVD laws to make the investigation process more effective and efficient.
- Implementation and ongoing maintenance of the AIM system: Continue robust funding and dedicated staff to maintain the Aluminum Import Monitoring (AIM) system. The AIM serves as an early warning mechanism to spot trends and shifts in trade flows that might warrant industry or government enforcement action. As new license and trade data is available in the monitor, the Commerce Department should work closely with the association and member companies to analyze these trends and assess policy options to address emerging issues. Further, the U.S. should coordinate this monitoring with regional trading partners as much as possible. While Canada has implemented a formal monitoring program for aluminum imports, Mexico has not yet followed through on a commitment to do so.
- Increased monitoring and enforcement of trade rules by key trading partners: Encourage trading partners to ramp up enforcement activity within their borders to avoid unfairly traded metal spilling over into new markets. After the U.S. implemented AD/CVD orders against China in the aluminum foil and common alloy sheet markets in 2018 and 2019, much of this unfairly traded metal shifted to several other countries, leading to new dumping in the U.S. and another trade enforcement effort. Market-based economies must act collectively on enforcement to avoid a continual game of trade enforcement whack-a-mole.
State subsidies and other unfair policies, particularly in China, have led to excess capacity in the global industry for the better part of a decade. This hurts U.S. aluminum workers and companies that cannot compete on a level playing field or sustain investments in primary aluminum smelters and semi-fabricated aluminum manufacturing. China’s particularly egregious trade-distorting behavior and its structural overcapacity is well-documented and has driven trade policy discussions in recent years. A 2021 report by the Organisation for Economic Cooperation and Development (OECD) found that Chinese aluminum firms received up to 35 times more in government loans and other support as compared to non-Chinese aluminum firms. These subsidies create major distorting effects in the global market, making it difficult – if not impossible – for others to compete fairly.
The Aluminum Association supports:
- Multilateral efforts to combat unfair trade practices: Prioritize multilateral action in coordination with other market economies (particularly the Group of Seven countries) to address subsidies and market distortions from state-owned enterprises (SOEs). The Aluminum Association supports efforts to find common ground on new rules that would rein in market-distorting policies and industrial subsidies. The United States should play a leadership role in shaping the World Trade Organization (WTO) reform initiatives to update rules for subsidies and state support. Multilateral rules, when enforced, are the most effective way to combat the spread of unfairly subsidized aluminum.
- Government-to-government negotiation with China: Pursue a government-to-government negotiated agreement with China that results in measurable and verifiable reductions in Chinese aluminum capacity. Such an agreement should address both upstream and downstream segments of the value chain and eliminate market-distorting governmental support for commercially unviable producers.
The United States has both a national security and economic interest in a strong and resilient domestic aluminum supply chain. Designated as an “essential” industry during the COVID-19 pandemic, both the Commerce and Defense Departments recognize the domestic aluminum industry as “vital to national security, especially in an unexpected or extended conflict or national emergency.” Tariffs on imported aluminum products can help combat unfair global trading practices and shore up U.S. aluminum supply chains by creating a barrier to unfairly traded imports. However, a unilateral tariff action alone cannot create the favorable market conditions required for much-needed long-term investments in U.S. primary aluminum production.
Currently, most aluminum products imported into the United States are subject to a 10% tariff authorized by Section 232 of the Trade Expansion Act of 1962. Some aluminum products are also subject to separate tariffs targeted at China authorized by Section 301(b) of the Trade Act of 1974. Aluminum imports from some countries in certain market segments are also subject to specific anti-dumping and countervailing duty (AD/CVD) tariffs. Ultimately, tariffs should be targeted to address unfair trade while avoiding unintended consequences for key trading partners.
The Aluminum Association supports:
- Immediate and urgent reforms to Section 232 exclusion process: Reform the Section 232 product exclusion system, which has inadvertently made the United States a magnet for aluminum imports. The current Commerce Department process actively incentivizes companies to turn first to imported aluminum products like sheet, plate and foil that are manufactured in abundance in the United States. If importers were to fully utilize the exclusions already granted by the Commerce Department, those customers would not need to purchase one pound of American-made aluminum can sheet for the next two years. Further, the Commerce Department should reverse the General Approved Exclusions (GAEs) that were created in December 2020 and re-examine whether the current list is appropriate or if GAEs are a useful tool for achieving the aim of the Section 232 remedy.
- Negotiated Section 232 tariff exemptions on market-oriented countries: Negotiate Section 232 aluminum tariff exemption on countries that trade fairly and have taken action to address unfairly subsidized imports into their own domestic markets. Any exemptions should be implemented in a thoughtful way with extensive industry consultation, as part of a comprehensive policy approach that supports the U.S. aluminum value chain, to allow market conditions to normalize.
- Continued Section 301 tariffs on aluminum imports from China: Maintain Section 301 tariffs on imports of aluminum from China – and ramp up evasion and circumvention efforts – until harmful structural subsidies that drive overcapacity are addressed. Also consider increasing the rate for aluminum products on List 4A back to 15% (or higher) and evaluate the initiation of a Section 301 evasion investigation on flat-rolled aluminum products from China. As noted in the Office of the U.S. Trade Representative 2021 National Trade Estimate Report on Foreign Trade Barriers, “China’s capacity and production continue to contribute to major imbalances and price distortions in global markets, harming U.S. aluminum producers and workers.”
- Trade agreements with strong, clear Rules of Origin: Negotiate – and implement – trade agreements that strengthen the U.S. industrial base and amplify our regional advantages. Such agreements can open markets for U.S. manufacturers, driving demand for aluminum across markets. Agreements should have Rules of Origin for aluminum and its key customer markets that promote demand for U.S.-made aluminum products while recognizing the inherently global supply chain for the U.S. aluminum industry.
- A national policy to ensure a resilient U.S. aluminum supply chain: Work with federal policymakers on a comprehensive national strategy to modernize both U.S. aluminum primary smelting and secondary recycling operations. Such an effort would need to include long-term federal investment. Trade policy and tariffs alone are insufficient to meet the legitimate national and economic security need for a self-sufficient domestic aluminum industry.
Rules-based trade and robust enforcement.
As a globally traded commodity business, the U.S. aluminum industry relies on a well-enforced, rules-based trading system to compete in the marketplace. Unfortunately, countries like China have long engaged in unfair trade practices including massive government subsidies for industry and product dumping in the U.S. and elsewhere. With smart trade policy and strong enforcement, U.S. aluminum companies can out-compete the best in the world.
OECD finds massive subsidies in China
A 2021 report by the Organisation for Economic Cooperation and Development (OECD) documented government subsidies to Chinese aluminum firms up to 35X more than comparable support in other countries.
Members-Only Trade Resources
Members of the Aluminum Association have exclusive access to industry-focused trade resources, including a comprehensive and up-to-date tracker of aluminum product exclusions from the Section 232 tariffs.