Tag: aluminum

America’s steel and aluminum industries are not just pillars of the domestic economy but foundational to national security.  Recognizing their importance, President Donald Trump has signed two new proclamations to restore and strengthen the Section 232 tariffs he boldly implemented in 2018.  

President Trump imposed the 2018 tariffs under Section 232 of the Trade Expansion Act of 1962, and America’s steel industry responded with over $15 billion in investments, expanding production and building new facilities. Century Aluminum, America’s largest producer, restarted idle production lines, Alcoa expanded operations, and U.S. aluminum production surged.  

President Joe Biden would end Trump’s Golden Age of steel and aluminum, however, with a withering wave of product exclusions, country exemptions, lax Customs and Border enforcement, and widespread tariff circumvention by foreign countries – including many of our putative allies. 

WHO GETS HIT HARDEST BY STEEL AND ALUMINUM TARIFFS?

Leveraging Biden’s weakness, China and Russia would transship steel through Mexico and Canada.  Japan, amidst its declining domestic demand, would target the American market with high-value specialty steel products that undercut U.S. producers. 

Canada’s government poured nearly a billion dollars into ArcelorMittal’s facilities, funding the transition of its outdated blast furnaces into modern Direct Reduced Iron – Electric Arc Furnace (DRI-EAF) operations.  These massive government subsidies thereby gave Canada’s national steel champion an unfair competitive edge. 

As for Mexico, it facilitated a more than 1,000% increase in steel rebar imports.  South Korea would use its quota exemption to flood the U.S. market, exporting over 2.6 million metric tons in 2023 alone. This has allowed Korea’s national champion POSCO to gain a dominant foothold in American supply chains.  

Even Brazil got into the act.  It would exploit its quota deal on semi-finished steel to export almost 4 million metric tons to the U.S. in 2023—nearly 15% of total U.S. steel imports.   Moreover, Brazilian producers, backed by export subsidies and a weak currency, would undercut American steelmakers, particularly in slab production, which U.S. mills then re-rolled into finished products at the expense of domestic melt and pour mills. 

WHAT ARE TARIFFS, HOW DO THEY WORK AND WHO PAYS FOR THEM?

The net result has been to erase nearly all of the gains under the original Trump tariffs.  Major U.S. producers, including integrated mills and mini mills, have reported deteriorating financial performance and idled production lines.  Domestic steel capacity utilization has dangerously dropped to 74%, well below the sustainable 80% threshold. 

America’s aluminum producers have been equally hard hit.  Australia has doubled its primary aluminum exports to the U.S while foreign competitors, including strategic adversaries like China and Russia, aggressively use transshipment loopholes through Mexico and Canada to evade and circumvent tariffs.  

As imports have surged, domestic aluminum production has fallen by 30% while smelter utilization rates have dropped to nearly 50%.  In June 2022, Century Aluminum idled its Hawesville, Kentucky smelter.  Alcoa announced the permanent closure of its Washington State Intalco smelter in March 2023 while Magnitude 7 Metals in Missouri curtailed operations at its New Madrid smelter in early 2024, further reducing the number of active primary aluminum producers in the U.S.   

To strengthen and reinvigorate our pillar steel and aluminum industries, President Trump has reinstated his across-the-board 25% tariff on steel imports and raised the aluminum tariff from 10% to 25% while eliminating all country-specific exemptions and alternative agreements. 

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To stop China and Russia and other foreign nations from using Canada and Mexico as transshipment hubs, the Trump 2.0 tariffs will ensure all imports, regardless of processing location, are subject to tariffs through the use of North American “melt and pour” and “smelt and cast” standards for steel and aluminum, respectively. 

The Trump 2.0 tariffs also crack down on the shell game of using “derivative products” to evade tariffs. Countries like China, Russia, and others now ship semi-finished steel or aluminum to Mexico, Canada, or the EU where it is lightly processed (e.g., cutting, welding, or coating) before being sent to the U.S. tariff-free under existing trade agreements while Ukraine sends semi-finished steel to be processed in Poland where it is exported as a derivative product to the U.S., avoiding Section 232 tariffs and anti-dumping duties.  

Tariff evaders also ship hot-rolled steel to tariff-exempt countries like South Korea or Japan where it is converted into cold-rolled or galvanized sheets before being exported tariff-free to the U.S. Still others may alter product forms just enough to have them classified as finished goods rather than raw materials, e.g., instead of shipping aluminum billets subject to tariffs, exporters extrude them into duty-free window frames or door thresholds. 

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The Trump 2.0 tariffs crack down on all such tariff evasion by significantly expanding tariff coverage to capture derivative product evasion even as the product exclusion process has been eliminated. There have been hundreds of thousands of such exclusions, overburdening the Department of Commerce while exempting 115 million metric tons of imports from tariffs. This bureaucratic giveaway to foreign manufacturers has now been eliminated with one stroke of the Trump pen, ensuring a level playing field for U.S. producers. 

Finally, U.S. Customs and Border Protection will make sure there is nowhere to run and nowhere to hide for the tariff evaders.  It will now rigorously investigate and penalize all tariff evasion and misclassification.  

In these ways, and in yet another example of “Trump promises made, Trump promises kept,” President Trump’s steel and aluminum proclamations reaffirm his unwavering commitment to American workers and national security even as they will usher in a new Golden Age of prosperity for two key pillar industries. 

Peter Navarro is the White House Senior Counselor for Trade and Manufacturing.