Trump enacts aluminum tariffs

President Donald Trump followed through on his threat to enact tariffs on Canada, Mexico and China within days of taking office for his second term, only to hit pause on the tariffs on Canadian and Mexican goods entering the U.S. for 30 days when the leaders of those countries agreed to increase border security to address illegal immigration and fentanyl trafficking, which Trump said the U.S. tariffs were in response to.

However, the additional 10 percent duty was levied on imports from China beginning Feb. 4, with that country taking retaliatory measures.

Trump signed another executive order Feb. 10 that the White House says closes existing loopholes and exemptions to restore a true 25 percent tariff on steel and raises the tariff on aluminum to 25 percent under Section 232 of the Trade Expansion Act. The tariffs, scheduled to go into effect March 12, could have severe ramifications for the U.S. aluminum industry, which counts on Canada for nearly 70 percent of its prime aluminum imports, according to Karen Norton, principal aluminum analyst at S&P Global Commodity Insights.

In response to the tariffs, Charles Johnson, president and CEO of the Aluminum Association, says, “During his first term, the president was early to recognize the genuine threat that nonmarket actors pose to U.S. manufacturing industries like ours. These actions helped lead to more than $10 billion in industry investment since 2016.”

“[Tariffs] might make flows less logical and optimal, and that has a consequence in price.” – Renato Bacchi, executive vice president and chief commercial officer, Alcoa

However, he says the U.S. lacks smelting capacity to supply its aluminum industry.

“To ensure that American aluminum wins the future, President Trump should secure access to the aluminum metal supply needed for American manufacturers while continuing to take every possible action at the U.S. border against unfairly traded aluminum from China and elsewhere.”

Another association voiced support for the tariffs.

“Unfair trade practices have devastated the domestic aluminum industry, and President Trump’s actions today will protect thousands of American workers and their families,” says Mark Duffy, president of the American Primary Aluminum Association.

The potential ramifications of tariffs were discussed during the S&P Aluminum Symposium, Jan. 26-28 in Fort Lauderdale, Florida.

Rich Burchett, chief metals officer at Commonwealth Rolled Products, said the firm had been running through contingencies, though it had not stocked up on material as it didn’t see a big supply chain disruption resulting from tariffs. Rather, he said more primary aluminum from the Middle East could enter the U.S.

Renato Bacchi, executive vice president and chief commercial officer at Pittsburgh-based Alcoa, said tariffs “might make flows less logical and optimal, and that has a consequence in price.”

He said high-carbon aluminum imports from the Middle East and India could grow, while low-carbon Canadian aluminum could be sold into Europe, resulting in longer transit times, a situation he described as “not optimum.”