Over the last month our industry has seen several issues settled in our favor, and one that is not. While our trade case against China has had a series of positive outcomes, the Trump Administration left us a problem to deal with in the aluminum Section 232 issue.
The 8th Administrative Review in our countervailing duty (CVD) case just concluded. All but two Chinese extruders will be subject to a 242% duty. The two Chinese extruders that participated in the review will have a CVD rate of 16%. The results from the 8th Administrative Review anti-dumping (AD)case are pending. An announcement is expected anytime. We anticipate the rates to remain at 86%. This is good news. If the AD rates hold, this means to total tariff for Chinese imports will be 328%, except for two companies, which will get a rate of 102%. This rate has proven itself to be effective in holding Chinese imports to less than 1% of our market. This was good news!
Of course, high tariffs bring circumvention efforts. No effort has been more substantial than the Chinese investment into the Kingtom operation in the Dominican Republic. As you may have seen in our most recent trade alert, the AEC prevailed in its Enforce and Protect Act (EAPA) claim against Kingtom. This is the second such determination in as many months. It was determined that Kingtom could not have possibly extruded the quantity and sizes of some of the extrusions they have been exporting. Therefore, Commerce ruled that if there is no way to determine the difference between Chinese extrusions and Dominican extrusions, all extrusion must be considered Chinese and thus subject to tariffs. Consequently, the seven importers identified in our claim now owe the duties on the shipments they have received. If it is determined there is criminal activity, fines could be rendered. This was better news because it sets us up for the 9th administrative review to argue that Kingtom should be subject to our Chinese tariffs on all imports going into the U.S. That will be argued this summer.
The bad news is that the Trump administration dropped the 232 tariffs on extrusions. Like the steel industry, this caught us completely off guard. The reasoning on the administrations side is that extruders have not been fighting exclusion requests, so therefore, there is no reason to have a tariff. They interpreted extruders lack of participation in the exclusion process as a sign that we wanted NO protection as limited as it might be. We have an opportunity to make our voice heard on this issue and will be making a filing this week. Given the number of industries negatively impacted by this decision, I am confident the new administration will hear us, and those tariffs will be re-instated.
Of course, we have been petitioning the government to remove the entire 232 aluminum order. So, with a new administration in place, the question is what they intend to do with the 232. All reports indicate they want to keep it in place. Evidence of that happened in recent days when the Biden administration quickly reversed the Trump administration exclusion to the UAE. Given the grounds on which Biden justified his reversal, it does appear that they will stay focused on ensuring the domestic primary aluminum is protected and will be using the 232 to do that. What we do not know is how the incoming appointments and staff at the Department of Commerce and the United States Trade Representative offices will influence this point of view. The AEC knows some of the staffers moving into those agencies and they know our point of view and are aware there are many other segments that want to see the 232 removed. This was a bad decision for us, but we hope to reverse it. As for the larger 232 issues, it appears they will stay with us for some time.
I do not want to leave this on a bad note. So, I will close with this. Last week we received our second scope challenge victory in the automotive space. An automotive window/door trim kit was ruled in scope. The decision was based on the language in our previous court victories that codified that sub-assemblies are not final finished products AND subassemblies with other components than extrusions can also be included in the scope of our orders. With these two victories, we have a stronger chance in appeal should either of these cases end up at the Court of International Trade (CIT).
We are just a few weeks into the new year and the reports from our China case could not be better! Our agenda for this year is aggressive, so having these early wins help us focus on other matters. At the same time, it appears the 232 will continue to haunt us and we have a lot of work in front of us to educate the new administration about the negative consequences of this policy to our industry. So, that is what we will do.
Thank you for your continued support!
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