SAFE Report Examines Trade Policy for the U.S. Aluminum Industry

From SAFE’s Center for Strategic and Industrial Materials (C-SIM) the report, “Political Tailwinds: Examining Trade Policy for the U.S. Aluminum Industry” examines how aluminum trade has been disputed, tariffed, monitored, traced, and capped, over the last decade. The most recent three presidential administrations have dealt with these issues multilaterally, bilaterally, and independently.

While trade policy related to aluminum has focused on competition from China’s overproduction—and resulting price suppression in the global markets—these policies have failed to address a more pressing problem on our own shores: the affordability of electricity in the United States.

  • The Obama administration’s multilateral approach led to little response from China on excess capacity. During his second term, domestic primary production sank to 64 percent.
  • The Trump administration set an explicit benchmark of the Section 232 tariffs of getting primary capacity to 80 percent, but capacity reached only 66 percent during his term.
  • The Biden administration’s results are yet to be seen, but so far during his first term two smelters curtailed and one is moving towards complete shutdown, adding to the pressure for the administration’s policies to respond to smelter needs.

To revitalize the essential aluminum industry in the U.S. and allied countries, this report recommends policymakers:

  • Confront the overproducing elephant in the room by continuing to incorporate provisions into the Global Arrangement on Sustainable Steel and Aluminum (GASSA) market to counter unfair trade practices by China.
  • Support domestic industry while avoiding retaliatory policies that are too broad and hurt allied countries.
  • Create transparency and certainty in the aluminum market to draw in private capital.
  • Incorporate like-minded countries and promote technology transfer within the GASSA market.
  • Provide affordable, abundant, and reliable energy sources for smelters. GASSA can go a step further by incentivizing aluminum sourced with clean energy sources. Power from renewable energy is less volatile and increasingly more cost competitive for smelters.

Download the report here.

In February, C-SIM released The U.S. Aluminum Industry’s Energy Problem and Energy Solution, a report examining the cruel irony of rising demand for aluminum’s energy-saving benefits versus the declining production due to its energy intensity in the production phase. Released in May, the Legislative Analysis for the U.S. Aluminum Industry report examined how federal incentives to produce more clean energy transition products do not address the main obstacle to production – access to energy. C-SIM will publish another report in the coming months looking at global best practices for aluminum production.