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Closing the Year with a 232 Bang!

The Trump Administration's 232 Investigation into the national security implications of imported aluminum has roared back to life. Government agencies, elected officials, and industry leaders have restarted this investigation, which had been put on the back burner by the administration as they grappled with the new tax bill.  With the January 27, 2018 deadline for the Department of Commerce to issue its recommendations to the president nearing, we have a lot of work to do to press our case.
During a workshop at our Aluminum Summit in Denver in September we discussed the key issues, the threats from this action, and the opportunity.  It was overwhelming agreed that we owe it to our industry to stay involved.  So, over the coming weeks we will be finalizing our remedy and taking it to D.C. to make our case.  We aim to go back to all of the government agencies we visited this summer and to Capitol Hill where we enjoyed a lot of support for our position.  This is where you can help.  As we raise our voice, we will want our customer base to understand the implications of the proposals being made to the administration to address the needs of the domestic aluminum industry.  So, I will be asking you to get the word out to your elected officials AND your customers in an effort to make our voice heard.  The AEC is very good at this.  I believe our combined voice will have a dramatic impact on the decisions the administration will face.

Central to our message is that the aluminum industry as a whole is vital to our national security, and the threat we face is from China, period!  We firmly believe the administration must stand up to the illegal and unfair trade practices of the Chinese in order to force them to curtail production and eliminate unnecessary capacity.  Only with a significant aluminum content tariff on semi-fabricated aluminum and semi-finished goods will we show China we mean business.  Should the administration go this route, we believe other countries will support the effort as China has disrupted their markets as they have ours.  This truly is a unique opportunity to take this issue to China in a unified way.

Our chief concern is the counter-proposal which states that the issue created by China’s overproduction of aluminum, which has depressed prices, can only be countered with a global tariff on all imports of primary aluminum products.  Speculation has run amok on what those duties would be, but I have heard anything from 3% - 30%.  I’ve also heard there may be a quote system put in place that allows incoming primary aluminum duty-free to a certain level, and then everything over that is subject to a tariff.  In all candor, I am not sure how the mechanics of that would work, nor the implications to the industry.  I’m also not sure the administration knows the answer to that either.  At the end of the day, any increase on primary aluminum costs will be passed along to the manufacturing community.  That surcharge on their aluminum could make it impossible for them to compete globally, since their international competitors won’t have that non-value creating cost.  Considering that China does not export primary aluminum, this solution would have NO impact on their exports and would actually increase the price delta between Chinese prices and the U.S.  We do understand the need and desire to have a robust primary aluminum industry in the U.S.  We just believe there is a better path.  If the U.S. decides to make a strategic decision to build a U.S. smelter capacity and production, then they need to do what other countries that have made this choice have done.  They need to create a plan to deal with the environmental, energy costs, and other issues that forced the U.S. out of the business over the last 20-plus years.  That’s the problem that needs to be solved.

Having looked at this issue at the Aluminum Summit it was clear to everyone that we must be involved in this process.  If you are interested in participating in the lobbying efforts, please let me know.  Additionally, these cases always come down to money.  And, we need money to support the legal costs to make this happen.  This entire process was an unscheduled event for which there was no budget.  In a year where we closed the Sunset Review, took on Zhongwang and Perfectus, and had to continue the day-to-day work of our annual administrative reviews and scope issues, this added expense has been a real burden to the Council and put us in a position where we have to ask for donations.  At the Aluminum Summit, a figure of $3500 per company was suggested, on a volunteer basis.  Please contribute your fair share of this.  Given the years of success we’ve enjoyed since the orders took place, this is a small contribution that helps you protect a much fatter bottom-line.  You can take care of this today by downloading the AEC Fair Trade Donation Form here and sending in your contribution.

Thank you for your continued support!

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