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Will Tariffs Make US Aluminum Producers Great Again?

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Feb. 22 2018, Updated 3:55 p.m. ET

Tariffs in the US

Last week, the US Commerce Department released the results of its Section 232 imports probe. The investigations were initiated in 2017 to determine whether steel and aluminum imports threaten US national security. In January, the US Commerce Department submitted its findings to President Trump, who has to decide on any potential action by mid-April.

While the move triggered a buying spree in Century Aluminum (CENX) and the stock saw an upwards price action of 8.3% on February 16, Alcoa (AA), the leading US-based aluminum producer, closed at $47.36 on that day, which was a loss of 0.44% from its previous day’s closing. Although the stock made an intraday high of $50.18 on February 16, it couldn’t hold on to its gains.

Rio Tinto (RIO) and South32 (S32), two non-US-based aluminum producers, fell 1.8% and 2.1%, respectively, on February 16. The SPDR S&P Metals and Mining ETF (XME) rose 2.5% led by the gains in US steel companies.

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Series overview

Protecting US manufacturing from imports was among Donald Trump’s key campaign promises. As president, he has taken steps to address the demands of US steel and aluminum producers.

Last year, the Trump administration self-initiated a probe into imports of aluminum sheets from China. Earlier this year, President Trump imposed duties on washing machines and solar panels—a move that infuriated South Korea and China.

In this series, we’ll look at the Commerce Department’s recommendations to President Trump and see how these recommendations, if implemented, could impact US aluminum markets. We’ll look at the perspectives of both aluminum buyers and producers.

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