High levels of aluminum imports entering Mexico and sold in the US, as well as flaws in the US' Section 232 tariff exclusion process are among the top trade concerns for the domestic aluminum industry, leadership of the US-based Aluminum Association said Sept. 26.
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The Aluminum Association and the Mexican Aluminum Association are pushing for the Mexican government to meet commitments under the US-Mexico-Canada Agreement to "seriously monitor" metal imports consistent with the requirements of the 2020 trade agreement, Henry Gordinier, CEO of Tri-Arrows Aluminum and vice chairman of the Aluminum Association said during a press conference at the trade group's annual meeting, held in Washington.
"Starting last year, we've seen a degradation of trade data from our counterparts in Mexico, which quite frankly, is unacceptable in a favored trading partner," Gordinier said.
The US dropped the 10% Section 232 tariff on imports of aluminum from Mexico as part of a 2019 accord in which Mexico agreed to ensure greater transparency regarding steel and aluminum imports from third countries.
Following removal of the tariffs, US imports of aluminum from Mexico, including both unwrought and wrought products, increased 86% in 2022 compared with the 2015-2017 historical average, according to US Commerce Department data.
The associations have called on the Mexican government to not only honor their commitments under the USMCA to set up an import monitoring system, but also to fix gaps in their trade data reporting that recently emerged, Aluminum Association CEO Charles Johnson said.
"We're not moving forward at the moment with the Mexican government, we're moving backwards and we need to fix that," Johnson said.
Gordinier said the organization is encouraged this issue is being taken seriously by the United States Trade Representatives' office, particularly as it relates to trade reporting requirements under the USMCA. US Trade Representative Katherine Tai, who shared the USTR's priorities with the group on Sept. 25, highlighted this issue in discussions with Mexican Secretary of Economy Raquel Buenrostro in July.
Section 232 tariff exclusion
Another area of focus for the association is advocating for changes to the existing Section 232 tariff exclusion process, Johnson said.
After the US introduced tariffs of 25% on steel imports and 10% on aluminum imports in March 2018, Commerce established a process for US companies to file product-specific exclusion requests for cases where there are no domestic availability or overriding national security concerns regarding the specific product.
However, Johnson said the exclusion process is "fundamentally broken."
"The exclusions that are granted annually in many of our markets are larger than the entire US market for those products," he said. "This is introducing distortions in the trade of aluminum and the use of aluminum in the US market," he said. "It's something that we have worked with the administration to fix, and we will continue to focus there until we get some resolution to that issue."
Commerce's Bureau of Industry and Security in August issued a proposed new rule aimed at improving the exclusion process for Section 232 steel and aluminum tariffs and is currently gathering public feedback on the proposed rule through Oct. 12.
"So broadly, we have the support we need from this administration and the devil is, of course, always in the details," Johnson said.