Aluminum Association Statement on 50% Section 232 Aluminum Tariffs

Aluminum Association President & CEO Charles Johnson issued the following statement in response the Trump administration’s decision to increase Section 232 aluminum tariffs from 25% to 50%: 

“Re-establishing a more level playing field for domestic producers is critical but a Section 232 tariff of 50% threatens to undermine the very industry the administration aims to support. The Aluminum Association, which represents the full industry supply chain and 70% of domestic production, urges the administration to reconsider today's decision given the negative impact it will have on manufacturers.  

Aluminum and steel are fundamentally different metals with distinct supply chains, market dynamics and strategic challenges. A one-size-fits-all approach to trade policy for these strategic materials risks unintended consequences for the U.S. economy and our national defense. Critically, a 50% tariff rate could also raise prices for consumers, decrease demand and undermine the aluminum industry’s ability to serve the U.S. defense industrial base. Aluminum firms need a reliable supply of metal, protection from transshipped metal from non-market economies, and certainty in the tariff landscape. 

The industry appreciates the Trump administration’s focus on bringing more aluminum production and jobs back to the United States and remains committed to supporting these goals. We look forward to working closely with the administration to clearly articulate industry concerns related to Section 232 tariffs and provide alternative actions that will better support the future growth of the U.S. aluminum industry.” 

Jobs & Impact 

Today, the U.S. aluminum industry: 

• Directly employs more than 164,000 workers and indirectly supports an additional 535,000 workers. 
• Directly generates more than $92 billion in economic output and indirectly generates an additional $136 billion in economic output. 
• Supports nearly 700,000 direct, indirect and induced jobs and more than $228 billion in economic output. 
• Committed or invested more than $10 billion in domestic manufacturing since 2016. 

Market Reality 

The U.S. aluminum industry looks very different today than it did 25 years ago, but it continues to pursue generational investment.  

• Since 2000: 

o   Operating U.S. primary aluminum smelters declined from 24 to 4 today due to lack of low-cost domestic electricity and unfair trade practices in China 

o   North America went from producing the most primary aluminum on earth to 4th place today with output dwarfed by China 

o   Demand for aluminum grew consistently as the U.S. industry evolved and shifted its business mid-and-downstream 

o   Domestic aluminum recycling grew by ~1/3 and now accounts for ~85% of U.S.-made aluminum 

o   Nearly 98% of all U.S. aluminum jobs today are in mid-and-downstream processing and recycling. 

• Despite a ~70% decline in primary aluminum jobs since 2013, overall industry jobs have held steady as employment shifted downstream and certain industry segments have seen record job growth. Strong trade enforcement including Section 232, Section 301 and antidumping/countervailing duty tariff interventions during the first Trump administration supported this growth. 
• Today, about two-thirds of the primary aluminum the U.S. uses comes from Canadabecause we don’t have nearly enough domestic capacity or energy supply to meet demand. 
• The industry wants to build more smelters in the United States but that would taketime (5 – 6 years), significant capital investment ($4 - $6 billion/facility) and long-term, competitive power contracts for annual electricity use equivalent to the city of Boston or Nashville. 

Critical Mineral for National Security 

The aluminum industry is an essential element for U.S. economic and national security. 

• Aluminum is one of only 11 mineral commodities included on every government critical materials list.  
  • The Department of Defense recognizes aluminum as essential to the military industrial base; the Department of Energy recognizes aluminum as critical to the U.S. energy supply chain; and the United States Geological Service recognizes aluminum for its integration into the nation’s technology and economy. 
• Aluminum supports the American warfighter. It’s used in less obvious applications like fighter jets, body armor, transmission lines and building materials. 

China’s Growing Impact 

• China’s subsidized overcapacity remains the fundamental challenge facing the industry. 
• An OECD report found that 85% of the $70 billion in global aluminum subsidies from 2013 – 2017 went to just five Chinese-owned firms. 
• Subsidies peaked in 2009, when ~14% of the revenue of Chinese aluminum firms came from government support.  
• Even today, ~4% of revenue from Chinese aluminum firms comes from state subsidies, compared to ~1% in the rest of the world. 
• China’s growing market dominance: 

o   Creates over-reliance on Chinese supply chains, threatening national security 

o   Reduces returns and growth opportunities in the rest of the world 

o   Threatens jobs in strategically critical industrial sectors 

o   Increases global emissions in the sector due to heavy reliance on coal-fired power 

• The U.S. aluminum industry can compete with China on a level playing field – but not with the Chinese government. 

Aluminum Association | https://www.aluminum.org/