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APAA favors US aluminum tariff quota for EU

Highlights

APAA says tariffs support reinvestment in US smelters

Favor for quota runs counter to calls from other stakeholders

The American Primary Aluminum Association said Oct. 5 it would support a "well-crafted tariff-rate quota" on US aluminum imports from the EU to preserve the effectiveness of the Section 232 aluminum tariff if the trade policy is modified as a result of ongoing negotiations between the two governments.

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The APAA said the aluminum tariffs have been critical in saving the American primary aluminum industry and promoting reinvestment in the country's existing smelters.

"Prior to the institution of the Section 232 program, all of America's primary aluminum smelters were slated for closure as a result of the collapse in prices due to the global excess capacity crisis," the APAA said in a statement. "As a result of the Section 232 program, the US primary aluminum has stabilized and has begun the long process of rebuilding what was lost to decades of the devastating effects of global excess capacity."

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.

Support for the quota runs counter to "claims made by associations representing foreign producers" that favor the gradual phasing out of the tariff for the EU without the use of quotas as a replacement trade mechanism, the APAA said.

"Calls from foreign trade groups seeking to phase down the tariff seek only to benefit their affiliated semi-finished European production rather than 'Building Back Better' by investing in American manufacturing and American jobs throughout the entire value chain," the association added.

Other groups favor removal

Groups such as the US-based Aluminum Association, which represents the majority of the US downstream aluminum industry, and the European Aluminium Association are pushing for the US tariff on the EU to be slowly removed in stages, rather than to be replaced with a tariff.

"The US aluminum industry is integrated with our partners in Europe," Aluminum Association CEO Tom Dobbins said in a recent editorial published in the Pittsburgh Post-Gazette. "Some domestic aluminum companies even have European affiliates. Many US producers rely on intermediate products from the EU, which are then finished here and sold into the market."

Dobbins said the potential imposition of quotas would put a kink in this international supply chain, adding that neither the US nor EU stands to benefit from it.

Conversely, metal traders and China-based producers would reap the rewards of ongoing tariffs or quotas between the US and EU, he said.

"Metal traders will use them to exert leverage and manipulate prices," Dobbins said. "The end result will be uncertainty for businesses and higher price for any US consumer who buys aluminum products, which means every US consumer."

Regarding China, Dobbins said an "unnecessary dispute" between the US and EU distracts from the threat of overcapacity and dumping from Chinese aluminum producers, a problem on which the Atlantic trading partners must work together to combat.