April 24, 2018 / 11:43 AM / 5 months ago

U.S. aluminum trade group calls on Trump to avoid quotas

LONDON (Reuters) - A U.S. aluminum trade group said U.S. manufacturers rely on foreign metal and called on the U.S. government to avoid quotas on nations exempted from tariffs on aluminum imports.

U.S. President Donald Trump last month announced a 10 percent tariff on aluminum imports to counter what he has described as unfair international competition, but granted temporary exemptions to Canada, Mexico and other allies.

U.S. industries that use aluminum were under threat due to dependence on imported metal, Heidi Brock, chief executive of the Aluminum Association, told the CRU Aluminium conference in London.

“U.S. jobs and aluminum manufacturing sectors today rely significantly on imported metal. Quotas will chill investment in growth and jobs,” she said.

The U.S. aluminum industry creates $186 billion in economic activity, the association said on its website.

“To its credit, the administration has taken some good first steps on temporary exemptions for trading partners, but we want to see certainty about that trading landscape,” Brock said.

“Avoid quotas in any form on imported aluminum coming from exempted countries.”

In February, U.S. Commerce Secretary Wilbur Ross said powers “can be applied in a much more surgical way” that could lead to tariffs on imports from certain countries and quotas from other nations suspected of transshipping products.

Brock said tariffs should target only China due to overproduction there and a monitoring system should be set up to ensure that “unfairly traded metal” does not evade controls by moving via third countries.

PRODUCER EXPECTS EVENTUAL QUOTAS

U.S. primary aluminum producer Century Aluminum Co, however, said quotas were needed.

Without quotas, countries that have exemptions would likely redirect their metals exports to the United States to take advantage of higher prices there, undermining the purpose of the tariffs, said Jesse Gary, executive vice president of Century.

“If these countries can send as much as they want into the United States and the United States (aluminum) is trading at a tariff premium, they’ll send more metal in to capture that premium,” he told Reuters on the conference sidelines.

The tariffs will enable Century, which is majority-owned by commodities group Glencore, to bring its Hawesville smelter in Kentucky back to full capacity of around 265,000 to 270,000 tonnes annually by early 2019, Chief Executive Michael Bless told Reuters in February.

Hawesville, the main U.S. producer of high-purity aluminum used in military aircraft, had shut down about 60 percent of its production machinery in response to a flood of imports.

Gary said there might be extensions to the tariff exemptions when they expire on May 1, but eventually quotas would be imposed.

“They (the administration) are very attuned to the goal of restarting U.S. smelters ... We think there will be quotas.”

Reporting by Eric Onstad and Peter Hobson; Editing by David Evans and Dale Hudson

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