Senators Press Commerce Over Exclusion Rules for Tariffs

June 12th, 2023 by Drew Vass, Executive Editor

Members of the U.S. Senate, led by Senator Tom Cotton (R-Arkansas), appealed to the Department of Commerce (Commerce) last week, urging Secretary of Commerce Gina Raimondo to revise exclusion rules for tariffs on aluminum extrusion products. In a letter addressed to Raimondo, a bipartisan group of seven U.S. Senators suggested that General Approved Exclusion Rules have “placed unnecessary burdens on domestic aluminum manufacturers,” while producing a surge of foreign imports. According to the letter, imports for extruded aluminum products have risen by 82% since 2019, leading to a loss of “millions of tons of possible sales.” Foreign market penetration now exceeds 25%, the group said, marking the highest level in more than a decade. As a result, they’re urging Commerce to reform an existing Section 232 exclusion process for extruded aluminum.

According to the letter, in 2018 Commerce reported that rising aluminum imports were weakening the domestic economy. As a result, a 10% tariff was imposed. Aluminum imports then fell by 31%, while domestic production increased by nearly a billion dollars between 2018-21, the group said. Meanwhile, separate data provided by the Aluminum Association shows Imported aluminum and aluminum products coming into North America have fallen by 24.2% year-over-year in the first quarter of 2023, after growing by 26.8% in 2022.

“Although these tariffs have curbed unfair foreign competition for primary aluminum producers, they have not sufficiently protected aluminum extruders. This is because the Department of Commerce has adopted overly broad tariff exclusion rules,” the senatorial cohort suggested.

General Approved Exclusions rules allow American purchasers to import extruded aluminum products tariff-free in the event that a product cannot immediately “be produced in the United States in a sufficient and reasonably available amount or of a satisfactory quality.” In the event that an American extruder objects to an exclusion, they must prove their company can either produce the product in eight weeks or faster than any specified foreign competitor. “While the spirit of the requirements is reasonable, these rules have placed an unfair burden on American extruders,” the letter said.

According to the bi-partisan group, extruded aluminum imports from Mexico, which is suspected of accommodating Chinese transshipment, have risen by 150%. Data gathered by [DWM] from the U.S. Census Bureau shows imports from Mexico for aluminum alloy hollow profiles increasing from $25.6 million in customs value in 2020 to $120.9 million in 2022, marking a 372% increase. The Aluminum Association released preliminary estimates as part of its monthly statistical report showing demand for the aluminum industry in the U.S. and Canada declining 3.5% through the first quarter of 2023. This follows estimated 4.8% demand growth through the end of 2022.

Officials for the Aluminum Extruders Council (AEC) said they commend the Senatorial group for “leading this effort to ask the DOC to address the serious threats to the U.S. aluminum extrusion industry and its workers from un-tariffed imports.”

According to AEC, U.S. aluminum extruders employ more than 60,000 workers, but since 2022 have been forced to cut shifts, capital investment and production, to the tune of nearly 9,000 jobs. The nature of custom manufacturing requires necessary tooling, which can take weeks, AEC officials said, adding, “The DOC nonetheless grants importers exemptions as if they were dealing with shelf-ready mass producers.” As a result, U.S. aluminum extruders have difficulty overturning exclusions, they said.

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