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Aluminum, steel industries welcome USMCA; some call for Section 232 exemptions

New York — Aluminum and steel industry representatives, along with end users of both metals, were supportive of the new United States-Canada-Mexico trade agreement in hearings Friday before the US International Trade Commission, but some cautioned for the need for Canadian and Mexican exemptions from Section 232 duties.

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The US ITC hosted a public hearing Thursday and Friday as part of an ongoing investigation on how the agreement could impact the US economy and specific sectors. Apart from manufacturers and automotive witnesses, agriculture, digital and labor groups also attended.

Steel industry representatives welcomed provisions regarding automotive rules of origin. The new rules require that 75% of auto content be made in North America, and a new labor provision stipulates that 40-45% of auto content be made by workers who earn a minimum of $16 hourly, the US Trade Representative said in an October 1 fact sheet.

Kevin Dempsey, senior vice president at the American Iron and Steel Institute, said that "the agreement also mandates that automakers purchase 70% of their steel from North America in order for their vehicles to be considered originating. These new origin rules will increase incentives for the use of North American steel in these products, which will benefit steel producers in the United States by increasing demand for domestically produced steel." He added that his association welcomed new rules on improved customs and currency manipulation enforcement.

Philip Bell of the Steel Manufacturers Association agreed, saying that his organization was "very pleased" with the new provisions in automotive origins and labor. "We strongly believe that these modifications will bolster the competitiveness of both the US steel industry and that of other North American steel producers," he said.

The Aluminum Association was also "very interested" in the automotive rule of origin provision, noting that it was still evaluating how the changes would affect the industry. "We do not anticipate any major disruption to the natural growth of aluminum in the auto market," Aluminum Association President and CEO Heidi Brock said, adding, "our members are interested in the requirement that automakers certify that at least 70% of aluminum purchases originate from North America."

Aluminum representatives, however, also stressed that they wanted to see Canada and Mexico excluded from tariffs.

"We urge the president to resolve the Section 232 tariffs on aluminum imports for our neighbors to ensure free movement of aluminum and aluminum products within North America," Brock said. "The new agreement simply cannot work as intended for the aluminum industry and our customers with those tariffs - or quotas to limit access to supply - in place."

Steel and aluminum end-users also called for Canadian and Mexican exemptions, citing rising costs.

Ann Wilson of the Motor & Equipment Manufacturers Association called the trade agreement "a positive step forward," but asked for the US to remove 232 tariffs before signing the agreement.

"The parties must agree to exempt Mexico and Canada from Section 232 tariffs on steel and aluminum. Since the beginning of the year, our industry has paid hundreds of millions of dollars in tariffs on imported steel. In addition, our members are reporting a 50% increase in the price of domestic steel," Wilson said when testifying Thursday.

Wilson also called for "greater clarity" on automotive rules of origin provisions and steel and aluminum requirements, while William Hanvey of the Auto Care Association asked that the administration work with the industry to develop and apply the standards. Hanvey disagreed on imposing tariffs, saying, "we hope that these 232 tariffs do not come into fruition."

The Beer Institute's James McGreevy III echoed these sentiments. "We do not believe the agreement is complete unless steel and aluminum tariffs are completely eliminated," he said in his testimony. "And for the record -- we don't support quotas in lieu of tariffs. Tariffs are taxes and quotas limit growth."

"It is fair to say aluminum is now the biggest product cost input for the beer industry," McGreevy added.

President Donald Trump sent his intention to sign an agreement to Congress on August 31, and is able to sign the agreement 90 days after the notification. The USITC must give the president and Congress its findings within 105 days of signing the agreement. No official details have emerged yet as to when the agreement will be signed. -- Rebecca Grenham,

-- Edited by Annie Siebert,