More than a year after President Donald Trump imposed tariffs on foreign metals, it’s still cheaper for U.S. manufacturers to buy their aluminum from overseas suppliers than American producers.
Last week, some of the U.S. industry’s top executives — including JW Aluminum CEO Lee McCarter — called for an end to the tariffs, saying they haven’t stopped overproduction in China and are actually making their own products more expensive.
They also warned against White House proposals to remove the import fees on aluminum from Canada and Mexico and replace them with quotas on shipments from the two neighboring countries. That would lead to shortages in the aluminum U.S. companies need to make their products.
“Unfortunately, the tariffs have done nothing so far to stop China’s trade-distorting behavior in the market,” said Jean-Marc Germain, CEO of Constellium, which makes rolled aluminum at 24 sites in North America, Europe and Asia.
“What it does is increase the cost of our products,” he said.
Germain said China’s aluminum production increased by 6 percent in 2018, with growth kicking in after the tariffs were implemented. Chinese government subsidies to the aluminum industry have totaled $70 billion over the last five years, according to a study by the Paris-based Organization for Economic Cooperation and Development.
Another study by George Mason University’s Mercatus Center shows U.S. buyers of Chinese aluminum have obtained tariff waivers on 86 percent of their imports, belying the notion that the tariffs were designed to hurt China.
On the other hand, U.S. companies using Canadian aluminum have received waivers on just 0.2 percent of their imports.
Aluminum executives said the White House should focus on “aggressive” talks with China to end overproduction and not on tariffs or quotas that penalize trading partners like Mexico and Canada.
“Our country’s ability to produce thin-gauge foil has been severely impacted by China over the last 15 years,” said McCarter, whose Goose Creek company makes flat-rolled aluminum products for the construction and the heating, ventilation and air conditioning industries.