Potential US, EU clean metal cooperation still in 'early days': Aluminum Association

The US and EU governments' ongoing work toward a trade partnership involving sustainably produced steel and aluminum remains in its early phases, but the US aluminum industry has been active in contributing to the bilateral discussions and is monitoring the process as it evolves, US Aluminum Association CEO Charles Johnson said April 25.

"Our association supports those goals that the US is pursuing, and we have been part of the conversation with the US government, and we do support the principles of the overarching framework," Johnson said during a press conference at the association's annual spring meeting held this year in White Sulphur Springs, West Virginia. "But, it is still very early days in terms of what that arrangement may look like."

Johnson said the Aluminum Association will continue to work with the US government to "ensure the principles that they are taking into their negotiations with the EU reflect our industry's interests."

"We look forward to seeing what the eventual arrangement looks like, and we can decide then what level of support the industry has for it," he added.

In October 2021, the US and EU reached an agreement in which the US would end its blanket 25% steel tariff and 10% aluminum tariff, both imposed under Section 232, on imports from the EU and replace the duties with a tariff-rate quota system. As part of the deal, the governments said they would work "to negotiate future arrangements for trade in the steel and aluminum sectors that take account of both global non-market excess capacity as well as the carbon intensity of these industries," according to a joint statement released at the time.

Targeted action

Since the 2021 agreement, US trade officials have periodically referenced it during meetings with trade representatives from EU member countries. Most recently, US Trade Representative Katherine Tai said she discussed "the ongoing US-EU negotiation of a global arrangement on sustainable steel and aluminum" as a topic of priority during an April 14 meeting with Liesje Schreinemacher, the Dutch Minister of Foreign Trade and Development Cooperation.

The US-EU cooperation would seek to promote the fair trade of steel and aluminum produced with lower carbon emissions and in accordance with market-oriented policies. Meanwhile, the alliance would establish potential import barriers in the US and EU, or create other trade enforcement, to target what the governments deem to be steel and aluminum produced with higher carbon emission intensity and promoted by market-distorting trade policies.

The collaboration would seemingly look to deter the trade of steel and aluminum produced in countries such as China, which US industries have accused of subsidizing market-distorting overcapacity.

The Aluminum Association has continually advocated for an aluminum trade policy that would address unfairly traded imports from specific countries, rather than a broad tariff action such as the Section 232 mechanism that imposed the 10% aluminum tariff on most countries, including trade allies.

Former President Donald Trump imposed the Section 232 steel and aluminum tariffs in 2018, citing the need to limit metal imports in an effort to support domestic production and national security. The tariffs have since been removed, temporarily suspended or replaced with quota deals on a case-by-case basis with multiple trade partners.

Impact of tariffs on Russian aluminum

Many global companies have announced "self-sanctions," or boycotts, of Russia-produced aluminum since Russia's invasion of Ukraine began in 2022. Earlier this year, the US also announced a 200% tariff on aluminum imports from Russia, with Canada implementing a full ban.

"The US industry still supports and stands behind any actions taken by the US federal government to intervene in this global security crisis," Johnson said. "This goes beyond the aluminum industry. It's a humanitarian crisis."

While US aluminum imports from Russia have represented a small fraction of the market in recent years, Johnson said the domestic industry must still monitor changes in global trade flows that result from various trade actions.

"It's a simple statement of reality that as various markets around the world turn away Russian aluminum, it's going to seek markets of last resort, and it will continue to be on the global market," he said.

The US' 200% tariff on aluminum from Russia also applies to imported products from other countries that are made using Russian aluminum. Market observers have noted the complexity involved with the prospect of enforcing this expanded provision of the tariff, but Johnson said the Aluminum Association has been working with the government to develop a strategy.

"Their intent is to take the existing provisions of the aluminum import monitoring system and adapt them and use them in a separate program implemented by [US Customs and Border Protection]," he said. "There are challenges here that we fully admit, but we also fully support the federal government's intent to enforce these tariffs if they believe this is the best path forward in addressing the Russia-Ukraine crisis."