Detecting Russian aluminum in broader US imports a 'complex' task: experts

US customs and aluminum importers face a difficult task in ensuring a slew of products from around the world do not contain Russian smelted aluminum for fear of incurring a new 200% tariff, industry and trade experts told S&P Global Commodity Insights.

"While it's easy to identify the provenance of ... primary metal coming from any country in the world, including Russia, as it hits the border, identifying or detecting ... the presence of Russian metal in a product that's been processed down to almost the consumer end is very complex," said Jean Simard, president and CEO of the Aluminium Association of Canada.

Under the tariff going live April 10, importers must declare the source of primary aluminum in a wide range of aluminum products to US Customs and Border Protection. If a product contains primary aluminum smelted in Russia, the tariff applies unless some narrow exceptions are met.

The trade measure is part of a package of new tariffs and sanctions the Biden administration launched Feb. 24 over Russia's invasion of Ukraine, which began a year earlier. The tariffs included restrictions on Russian metals and minerals and expanded penalties the US has levied against Russia over the war since early 2022. The April 10 rule follows a separate 200% tariff on direct imports of Russian aluminum that the US implemented on March 10.

Policing supply chains

It is unclear just how difficult it may be for US aluminum importers to comply with the new tariff.

"While there are still details to work out, the Biden administration is working hard to implement a rule that is workable and reasonable for the industry," Matt Meenan said in an email.

Meenan is the vice president of external affairs with the Aluminium Association, a US industry group representing aluminum companies. Meenan noted that US aluminum companies have worked closely with customs officials ahead of the April 10 tariff.

The CBP confirmed targeted products of the tariff in an email, but it did not respond to requests for comment on specific questions about how the tariff will be enforced and if it will be a challenge to monitor global supply chains for Russian aluminum.

The items targeted by the April 10 tariff include things such as aluminum bars, rods, plates, sheets, tubes, pipes, castings and unwrought metal, according to the CBP. It also applies to more specific items, or "aluminum derivatives articles," including some aluminum wires and cables, motor vehicle bumper stampings and tractor body stampings.

"The interesting part that could have commercial implications is the 200% on [imports from] allies, never mind adversaries, who go sourcing anything that was ever through a smelter in Russia," said Marc Busch, a professor at Georgetown University who has advised the US on trade barriers.

S&P Global sought comment from US aluminum companies; most did not respond. Kaiser Aluminum declined to comment about the process of complying with the new import rules, but it did say it had moved away from Russian aluminum.

"Historically, a small portion of the company's high purity aluminum requirements for aerospace had been produced in Russia," Kim Orlando, a spokesperson for Kaiser, said in an email. "However, that is now being sourced elsewhere."

Tough to detect

Russia is an important aluminum-producing country, accounting for about 5.5% of global production and about the same amount of global aluminum exports, according to a 2022 report by the Organisation for Economic Co-operation and Development. China, Japan, Turkey and India have been major buyers of Russian aluminum in recent years.

China's imports of Russian aluminum and aluminum products surged 59% on the year to 524,519 mt in 2022, as imports from the US and many other countries fell, according to S&P Global data. Canada, a heavyweight in aluminum production, is the top source of US aluminum imports. However, the UAE and China represent other key sources of US imports of items that could face scrutiny for Russian aluminum content.

"How would you detect, unless it's openly and transparently detailed ... the presence of Russian metal in there? I don't know," Simard said. "All sorts of situations have shown in the past that transshipment is not an easy thing to manage."

The tariff will make the cost of some imports containing Russian aluminum more expensive than alternatives made without it and could push companies to non-Russian imports, Ben Bidwell, director of North America customs and compliance with CH Robinson Worldwide, a supply chain logistics company, said in an emailed statement.

"Re-shoring or near-shoring is also something shippers may consider in these situations," Bidwell said.

S&P Global Commodity Insights reporter Kip Keen produces content for distribution on Capital IQ Pro.