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Industry Association Calls on Trump to Scrap Tariffs

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Aug. 18 2020, Updated 9:23 a.m. ET

Section 232 tariffs

The Section 232 tariffs imposed last year have received a mixed response from US companies. While downstream metal users (GE), including automotive companies like General Motors (GM) and Ford (F), were against the tariffs, the steel industry wholeheartedly welcomed them. In aluminum, Alcoa (AA) asked the Trump administration to address the core issue of Chinese aluminum overcapacity that’s hurting not only the United States but also the global aluminum industry.

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US Aluminum Association

Jean-Marc Germain, CEO of Constellium (CSTM), said on a conference call with reporters that “not all tariffs are created equal.” While admitting that the traditional anti-dumping cases “have proved to be extremely effective against unfairly subsided imports of Chinese aluminum,” he added, “we cannot point to a similar record of success from the Section 232 tariffs.” Germain went on: “Unfortunately, so far the tariffs have done nothing to stop China’s trade distorting behavior in the market.” According to the Financial Post, “Germain called on Trump to scrap the tariffs” on behalf of the aluminum association.

Chinese overcapacity

According to Germain, Chinese aluminum capacity increased 6% last year. The increase comes at a time when China’s aluminum demand indicators—especially vehicle sales data—point to slowing demand growth. Meanwhile, China exported a record high of aluminum last year amid tepid domestic demand. Higher Chinese aluminum exports are among the factors that weighed heavy on aluminum prices last year. Lower aluminum prices more than offset the positive impact of higher regional premiums resulting from Trump’s tariffs.

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