LONDON – A US aluminium trade group said US manufacturers rely on foreign metal and called on the US government to avoid quotas on nations exempted from tariffs on aluminium imports.
US President Donald Trump last month announced a 10% tariff on aluminium imports to counter what he has described as unfair international competition, but granted temporary exemptions to Canada, Mexico and other allies.
US industries that use aluminium were under threat due to dependence on imported metal, Heidi Brock, chief executive of the Aluminium Association, told the CRU Aluminium conference in London.
"US jobs and aluminium manufacturing sectors today rely significantly on imported metal. Quotas will chill investment in growth and jobs," she said.
The US aluminium industry creates $186-billion in economic activity, the association said on its website.
"To its credit, the administration has taken some good first steps on temporary exemptions for trading partners, but we want to see certainty about that trading landscape," Brock said.
"Avoid quotas in any form on imported aluminium coming from exempted countries."
In February, US Commerce Secretary Wilbur Ross said powers "can be applied in a much more surgical way" that could lead to tariffs on imports from certain countries and quotas from other nations suspected of transshipping products.
Brock said tariffs should target only China due to overproduction there and a monitoring system should be set up to ensure that "unfairly traded metal" does not evade controls by moving via third countries.
PRODUCER EXPECTS EVENTUAL QUOTAS
US primary aluminium producer Century Aluminum, however, said quotas were needed.
Without quotas, countries that have exemptions would likely redirect their metals exports to the US to take advantage of higher prices there, undermining the purpose of the tariffs, said Jesse Gary, executive VP of Century.
"If these countries can send as much as they want into the US and the US (aluminium) is trading at a tariff premium, they'll send more metal in to capture that premium," he told Reuters on the conference sidelines.
The tariffs will enable Century, which is majority-owned by commodities group Glencore, to bring its Hawesville smelter in Kentucky back to full capacity of around 265,000 to 270,000 tonnes annually by early 2019, CEO Michael Bless told Reuters in February.
Hawesville, the main US producer of high-purity aluminium used in military aircraft, had shut down about 60% of its production machinery in response to a flood of imports.
Gary said there might be extensions to the tariff exemptions when they expire on May 1, but eventually quotas would be imposed.
"They (the administration) are very attuned to the goal of restarting US smelters ... We think there will be quotas."