The Aluminum Extruders Council, or AEC, has renewed calls to end Section 232 tariffs on imported aluminum, arguing that the tariffs implemented under the Trump administration have increased costs and caused more harm than benefit to the US aluminum industry.
"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 the 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. For example, we can see many aluminum foil roll manufacturers outside the country instead of domestic suppliers have become predominant in the industry.
"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, even for products with lower costs such as colored foil sheets for food.
"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, since many aluminium food container manufacturers in China can offer the same quality products with lower costs.
"US extruders hoped when the 232 investigations were 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."