Biden tariff hike on Chinese aluminum shows commitment to US industry: Century Aluminum

US-based primary aluminum producer Century Aluminum praised President Joe Biden's May 14 tariff hike that more than tripled the US' Section 301 duties on aluminum imports from China, which the company sees as a critical trade protection amid its plans to build a new domestic aluminum smelter.

"President Biden's decisive leadership on Section 301 tariffs and to invest in the resurgence of US manufacturing shows this administration's commitment to US primary aluminum production," Century CEO Jesse Gary said in a statement.

"Thanks to the president's leadership, Century is planning to build a new greenfield facility that will double existing domestic capacity," Gary added. "The smelter would not only be the first new American aluminum smelter in 45 years, but also one of the 'greenest' smelters in the world, powered with cutting edge technology and renewable energy."

The US' import tariff increase on Chinese aluminum under Section 301 will see duties rise to 25% from 7.5%. The same measure was applied to steel products. The White House said Section 301 tariffs would also increase on lithium-ion batteries, battery components and some critical minerals.

The aluminum tariff follows a US funding package unveiled in March through the US Department of Energy that could infuse about $900 million into domestic aluminum decarbonization projects, including a potential $500 million funding opportunity for Century's proposed smelter.

"For my company, our workers, and others across this country, unfair trade is something that is very real," Gary said. "Today's announcement creates the climate for business to succeed, investments to be made, jobs to be created and workers to earn a good wage."

The US Aluminum Association also welcomed the increased tariffs on aluminum from China, calling it a "win for the US aluminum industry and the nearly 700,000 American workers the sector supports."

"Unfortunately, China continues to engage in significant unfair trade activities, including massive state subsidies which hurt US manufacturing and global carbon reduction efforts," the association said in a LinkedIn post May 14. "This targeted tariff action by the Biden administration will help to counteract some of these challenges."

Tariffs welcomed, but still fall short: SAFE

While the tariffs were largely welcomed, some industry groups and observers reiterated that they still represented only one aspect of a necessary and multi-faceted approach to protect US industries against China's manufacturing overcapacity.

"The US needs a comprehensive and coordinated response, and tariffs are a powerful but blunt instrument in a complex situation," Avery Ash, the executive director of SAFE's Coalition for Reimagined Mobility, said in a statement May 14.

SAFE is a bipartisan advocacy group that lobbies for transportation, energy and supply chain policies linked to the economic and national security of the US.

"Addressing China's unfair trade practices and market manipulation is essential defense, but must be coupled with effective offense- in this case a clear national commitment to and strategy for the US to double down on the development and deployment of market-defining technologies in the automotive sector," Ash added.

Abigail Hunter, SAFE's executive director for its Center for Critical Minerals Strategy, said unilateral tariffs alone would not address China's strategic industrial overcapacity.

"Common border tariffs through a multilateral coordination with allies will be necessary to prevent dumping, and to block Chinese exports from causing global price collapses," she added.

US has minimal direct exposure to China's aluminum

In addition to the Section 301 tariffs, China's aluminum products are already subject to a slew of trade defenses in the US. These include the 10% Section 232 tariff and some product-specific antidumping and countervailing duties.

The cumulative trade actions have reduced the US industry's direct exposure to imports from China in recent years.

US aluminum imports from China in 2023 reached their lowest point since 2012, totaling about 198,000 mt and accounting for a 3% share of total imports, according to US Commerce Department data. Imports last year fell from over 290,000 mt in 2022.

However, concerns in the US persist that Chinese aluminum may still be distorting the market via trade flows with Mexico.

Mexican imports of unwrought aluminum from China, for example, jumped to almost 20,000 mt in 2023 from about 7,000 mt in 2022, according to data from S&P Global's Global Trade Analytics Suite derived from bill of lading data collected from third-party sources. Annual volumes in 2023 were the third highest over the last 10 years.

Aluminum Association CEO Charles Johnson said that aluminum trade flows from China into Mexico could have multiple impacts on the US market.

"There are knock-on effects of Mexican manufacturers being priced out of their own market and seeking markets in the United States for their materials and using Chinese or Russian metal as an input at an unfair advantage," he said at an April press event.

"Then, access to market is also a huge issue for our members," he added. "The Aluminum Association members have traditionally found robust markets in both Canada and Mexico and have sold directly into those markets. We have seen those markets dry up as we have tried to compete further with Chinese imports into those markets."