This week, the Trump administration ordered the Commerce Department to begin an investigation into foreign aluminum that’s inundating the U.S. market from countries such as China.
“Imports have been flooding into the aluminum industry,” Commerce Secretary Wilbur Ross told reporters at a press briefing on Wednesday.
The investigation is being launched under a provision of U.S. trade law called Section 232.
The purpose of 232 investigations is “to determine the effect of imports on national security,” according to the Commerce Department’s Bureau of Industry and Security. “Investigations may be initiated based on an application from an interested party, a request from the head of any department or agency, or may be self-initiated by the Secretary of Commerce.”
After the Commerce Department conducts its probe and issue a report, the president can take action to “adjust the imports of an article and its derivatives” or take other non-trade-related actions as he deems necessary.
The Aluminum Extruders Council (AEC) praised the president’s initiation of a Section 232 investigation.
“As is the case with other core industries identified by the president, unduly low prices caused by excess aluminum capacity in China, government subsidization, and dumped imports have and continue to negatively impact domestic aluminum extruders and their workers,” the AEC wrote in a statement. “U.S. aluminum extruders continue to be threatened by the massive surge in Chinese aluminum extrusion exports flooding the global market, resulting in a significant increase in transhipment and circumvention of our antidumping and countervailing duty orders. The massive amount of Chinese excess aluminum capacity has also crashed aluminum prices decimating our U.S. supply base and putting U.S. extruders at an even greater disadvantage to their unfairly subsidized foreign competitors.”
In January, the United States filed a new trade enforcement complaint against China at the World Trade Organization (WTO), alleging the country is skirting WTO rules by providing subsidies to certain producers of primary aluminum.
The outgoing Obama administration said it took the action to address U.S. concerns that China’s subsidies are artificially expanding Chinese capacity, production and market share and causing a significant decrease in the global price for primary aluminum.
“Artificially cheap loans from banks and low-priced inputs for Chinese aluminum are contributing to excess capacity and undercutting American workers and businesses,” U.S. Trade Representative (USTR) Michael Froman said in a statement.
The USTR office claims that from 2007-2015, Chinese primary aluminum production increased by approximately 154 percent and capacity increased by approximately 243 percent, while global prices fell by approximately 46 percent. It notes that during the same period, U.S. primary aluminum production decreased by approximately 37 percent and capacity decreased by approximately 46 percent, even though overall U.S. consumption increased. The number of U.S. aluminum smelters fell from 14 in 2011 to five in 2016, with only one operating at full capacity.