Aluminum Extruders Council calls to end aluminum import tariffs

　　"Due to the 232 tariff on primary aluminum, US extruders pay more for their aluminum than any country in the world," the AEC said in a statement June 9. "While China subsidizes aluminum prices to fabricators, our country is doing the exact opposite."

　　The AEC said extruders were now more reliant on imported primary aluminum billet subject to the tariffs, with the pending closure of Alcoa's Intalco Works smelter in Ferndale, Washington, a sign that the Section 232 aluminum tariff has not met its intended purpose.

　　"With the closure of Alcoa's Intalco Works in Ferndale, Washington, US extruders lost their only remaining primary billet supplier west of the Mississippi," the council said. "Having no other option, those extruders have been forced to place orders for imported billet. How could another American smelter close while the 232 has been in place for nearly three years?"

　　Since the tariffs target primary aluminum imports, the AEC said foreign producers were encouraged to instead fabricate extrusions from primary aluminum for export to the US, ultimately supplanting domestic production.

　　"Exporters circumvent the orders by fabricating the extrusions and labeling them under an HTS code not covered by the 232," the AEC said. "The net effect of this is that the US extruder not only loses the extrusion volume, but also the additional revenue that comes from that fabrication work."

　　The AEC said US extruders have found it increasingly difficult to compete with value-added extrusion imports from countries that produce at lower costs.

　　"US extruders trying to retain business see a wider price gap versus low-cost countries when more value is added to the part, so those low-cost countries have us right where they want us," the AEC said. "There isn't a week that has gone by since the third quarter of 2019 that we haven't heard of an extruder losing business or price to a low-cost country, and that was before the coronavirus pandemic."

　　The AEC said the aluminum tariffs under Section 232 fail to address Chinese overcapacity, which the council said was the real challenge to the US industry.

　　"US extruders hoped when the 232 investigation was announced that action would be taken to stand up against the Chinese aluminum industry," the AEC said. "We hoped that measures would be taken so that there could be a robust US aluminum primary industry from which we could buy our metal. Our hopes have been bitterly disappointed."

　　The AEC said the tariffs position every foreign country as a threat to the US industry, rather than only China.

　　"The industry was told that a global tariff would rebuild domestic production of primary aluminum, would address transshipment and circumvention issues, and would protect the downstream markets by expanding the 232 order to include all Harmonized Tariff Schedule codes in Chapter 76, which includes extruded shapes. Sadly, none of those things happened."

　　Alcoa CFO William Oplinger provided similar comments regarding the tariffs in relation to overcapacity in China.

　　"Our position is that China overcapacity and heavy subsidization of the industry is the real problem, and the tariffs are an ineffective tool to address that problem," Oplinger told participants June 8 during a virtual presentation for the Deutsche Bank Global Industrials & Materials Summit.

　　Echoing the AEC's statement, the Aluminum Association also noted the ineffectiveness of aluminum tariffs against all foreign countries.

　　"The Aluminum Association continues to favor the removal of Section 232 aluminum tariffs on all countries defined as market economies by the Commerce Department," Aluminum Association CEO Tom Dobbins told S&P Global Platts June 9. "Unfortunately, across-the-board tariffs have not had an appreciable impact on Chinese aluminum overcapacity, the fundamental global trade challenge facing US aluminum companies today."

　　As long as the tariffs remain in place, the tariff exclusion process which has harmed domestic producers must be reformed, Dobbins added.