January 24, 2019 

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The sentence we have chosen to highlight as today's featured quote may seem bland.  In context, however, it was profound.  As you will see from the notes below, we have posted both the audio of Ms. Brock's presentation on January 24 and our transcript of it. You will want to access it one way or another.

The distinction Ms. Brock made between trading partners "who play by the rules" and those who do not is important generally and central to the current challenges facing U.S. aluminum producers.  There is no need to speak in abstracts.  Ms. Brock didn't.  The key country not playing by the rules, she said, is China, and the principal fair-trade supplier that is being hurt by the U.S. 10 percent ad valorem, 232 tariffs on aluminum imports is Canada.  Well, Canada and its customers in the United States.  

 

"China's aluminum industry has benefited from massive, unfair state subsidies for many years,"  Ms. Brock said.  She made that statement at the beginning of her presentation and put it in perspective this way:

 

Implicit in her comments was the fact that the challenges posed by China's unfair trade practices in the aluminum sector are not about China's exports of primary aluminum but rather about the downstream products made from it.  It is on some of those products that the Aluminum Association has filed and won antidumping and countervailing duty cases. "Targeted, trade-enforcement actions against actors like China who are not playing by the rules is appropriate, and it is effective," she said.  She added:  

 

We do not, however, believe that the broad, across the board tariffs, like those currently in place under Section 232 are constructive.  And the vast majority of the domestic aluminum industry is not interested in this protectionist approach to trade policy.  What we are interested in is competing on a level playing field globally for the long term.  And that is why we are calling on the President to reinstate full, quota-free exemptions from the Section 232 aluminum tariffs on Canada and Mexico before the USMCA is implemented by Congress.   

 

Some 97 percent of the jobs in the aluminum industry, Ms. Brock explained are in the "mid- and downstream part of the industry," and those elements of the industry need more primary aluminum than the U.S. can produce.  Canada is the logical, traditional, principal supplier, and those supplies are now more expensive.  "To date," Ms. Brock explained, "American imports of aluminum worth more than $8 billion have been hit by Section 232 tariffs in what we feel is a significant tax on the metal."  That, she said, is a problem.  Why?  Because:  

Our member companies, which do include a primary producer, know that artificially inflated prices and constraint of supply will, ultimately, harm demand, our growth, and investment for aluminum firms in the United States.   

 

As for what the 232 tariffs are doing to China, they may well be having the perverse effect of aiding Chinese products in their push for foreign markets.  Ms. Brock explained:   

 

We've seen very little evidence that the Section 232 tariffs are actually impacting the behavior in China, which continues to massively subsidize its aluminum sector.  China's capacity has grown by more than 62 percent over the past five years, and last year alone it grew by an additional 6 percent.   

 

So, despite the very good intentions, I think, on behalf of the Administration to strengthen the aluminum industry, there is in fact evidence that the tariffs may actually be helping Chinese aluminum producers enter new markets by increasing China's price advantage over aluminum produced out of North America.