APAA says US quota on EU aluminum will support domestic industry

The American Primary Aluminum Association has expressed its support for a trade agreement made Oct. 30 in which the US will replace its 10% tariff on aluminum imports from the EU with a tariff-rate quota, a move that the group says will protect the domestic primary aluminum industry.

"The just announced TRQ deal will maintain the effectiveness of the Section 232 aluminum program, while allowing us to support continued investment in the US primary aluminum industry and create more American aluminum jobs," APAA CEO Mark Duffy said in a statement Oct. 30.

Import tariffs of 25% on steel and 10% on aluminum from most countries were introduced by former President Donald Trump in March 2018 using a national security justification under Section 232 of the Trade Expansion Act of 1962.

As an alternative to a tariff on all imports from the EU, the APAA said the quota serves as an extension of the Section 232 program, which has prevented the closure of all the US' remaining aluminum smelters due to global overcapacity.

"Since its implementation, the Section 232 program has helped America maintain its ability to produce primary aluminum, protecting and creating thousands of American aluminum jobs and leading to over $6 billion in new domestic capital investments, both in upstream and downstream (aluminum industries)," the APAA said.

The APAA represents US-based Century Aluminum and Magnitude 7 Metals. Century operates three of the six remaining aluminum smelters in the US that are still operational. Magnitude 7 operates one of the remaining smelters.

Century and Magnitude 7 have restored 155,000 mt/year and 160,000 mt/year of incremental primary aluminum capacity in the US, respectively, since 2018, Duffy told S&P Global Platts Nov. 1.

Pittsburgh-based Alcoa has also restarted 160,000 mt/year of aluminum production at its Warrick smelter in Indiana since 2018, though it idled 230,000 mt/year of capacity at its Intalco plant in Ferndale, Washington, in 2020.

The US-based Aluminum Association, which represents the majority of the nation's downstream aluminum industry, said it preferred a gradual phaseout of the tariff, without a quota, as the best approach to resolve the US-EU trade dispute.

Still, the association said it would wait to learn more information regarding the new deal.

"The association looks forward to learning more about the specifics of the proposal and working with the administration to ensure that the ultimate agreement brings us closer toward our shared goals of growing American aluminum jobs while combatting unfair Chinese industrial policy," the Aluminum Association said in a statement sent to Platts Nov. 1.

Aluminum quota set below historical import levels

Duffy said the effectiveness of the new quota deal between the US and EU is bolstered by the low import levels that have been set.

"Of critical importance, the arrangement supports America's primary aluminum industry by setting the quota portion of the TRQ at very low levels that are well below pre-232 volumes," he said.

The aggregate annual US import volume from the EU under the TRQ is set at 18,000 mt for unwrought aluminum under two product categories and 366,000 mt/year for semi-finished aluminum under 14 product categories, according to a joint statement issued by US and EU officials.

US annual imports of primary, unwrought aluminum from the EU under HTS categories 760110 and 760120 have fallen every year since 2017, when they rose to over 27,000 mt from 18,778 mt in 2016.

Shipments totaled about 22,000 mt in 2018, 15,500 mt in 2019 and under 8,000 mt in 2020. Imports hit a much higher point of 40,000 mt in 2015.