European Aluminium warns that the US tariff quotas on aluminium will create additional market instability for companies on both sides of the Atlantic.
The european aluminium association European Aluminium believes that the tariff-rate quotas, which will replace the existing 10 percent tariff on EU aluminium products under Section 232, will result in even more trade distortions.
Lose-lose situation for the aluminium industry
“It seems the EU and US administrations assumed that trade policies that work for steel will work equally well for aluminium without taking into account our industry’s specificities and our continued opposition against tariff-rate quotas. Replacing the Section 232 tariffs with another trade-distorting measure is a lose-lose situation for the aluminium industry and their downstream customers on both sides of the Atlantic. The quota system will only create a two-tier price system and additional unpredictability. Metal traders will use this to their advantage to manipulate aluminium prices at the expense of aluminium producers and manufacturers. We’re also extremely disappointed the quotas are based on historical volumes from 2018-2019, rather than a future-proof quota system which takes into account the growing demand for aluminium,” comments Gerd Götz, Director General of European Aluminium.
US tariff quotas for aluminium will result in even more trade distortions
European Aluminium and its US counterpart The Aluminum Association have called for lifting the unjustified Section 232 tariffs on EU imports since their implementation in 2018 and have submitted a concrete proposal on restoring the trading relationship between the two markets. Europe has always been an important ally of the US, and European aluminium exports to the US have never posed a threat to US national security. On the contrary, the US and European aluminium value chains are strongly interlinked, with over 15 multinationals operating in both territories.
European Aluminium welcomes the decision to develop a Global Arrangement on Sustainable Steel and Aluminium to reduce global carbon emissions and tackle Chinese subsidised excess capacity, which undermines European production and distorts global markets. The association believes the Arrangement could help incentivise the production of sustainable aluminium on a global scale and looks forward to making a positive contribution to the Arrangement. However, the two-year negotiation period on the Agreement should also be used to remove the unjustified Section 232 tariffs and the quota system permanently. The European aluminium industry fears that the EU’s acceptance of tariff-rate quotas will normalise the use of such quotas, which continue to penalise free and fair aluminium trade.
Unfair competition from China
“European aluminium producers already face tremendous competitiveness challenges because of the high regulatory costs in the EU and unfair competition from China. Yet despite our industry’s precarious situation, the EU suspended long overdue anti-dumping measures on dumped Chinese flat-rolled products, depriving us of the level of trade defense protection American companies enjoy. It now deals us another blow in the space of a month. The EU is sacrificing the entire aluminium value chain like never before to appease a handful of downstream users and traders,” Götz commented on the broader trade challenges faced by European companies.