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  • News announcement
  • 20 July 2021
  • 3 min read

US importers and consumers are affected by US tariffs on aluminium

US tariffs on aluminium increased prices for US importers and consumers without any major effect on US imports from the EU and on global overcapacity, according to an assessment published today by the European Commission’s Joint Research Centre (JRC)...

The EU aluminium industry had an annual turnover of €61.5 billion in 2018
The EU aluminium industry had an annual turnover of €61.5 billion in 2018
© Bildwerk, adobe stock 2021

US tariffs on aluminium increased prices for US importers and consumers without any major effect on US imports from the EU and on global overcapacity, according to an assessment published today by the European Commission’s Joint Research Centre (JRC).

In June 2018 the Trump administration imposed a tariff of 10% on a wide range of aluminium products coming from the EU, based on Section 232 of the US Trade Expansion Act, claiming that EU imports of aluminium to the US constitute a national security threat for the US.

Despite the tariffs:

  • EU exports of targeted aluminium products increased by 37% in volume and by 30% in value (in the 19 months following the introduction of the measures, compared to the 19 months preceding it).
  • The EU’s share in volume of US imports for these products increased from 4.2% to 6.7% in the same period.
  • The EU’s share in the U.S. market rose from 9% to 12% between 2018 and 2019. With this share, the EU became the second largest origin for U.S. imports after Canada (with a share of almost 33% in 2019).

The increasing demand for EU aluminium in the US showed that US needs EU aluminium despite the 10% extra cost coming from the tariffs. The induced extra cost has just increased the price paid by US aluminium users and consumers.

While harming US importers and consumers with a price increase, there is very little evidence that the extra-tariffs had a positive impact on US production or that they indeed reduced global overcapacity.

Chinese overcapacity in primary and semi-finished aluminium production persists and the COVID-crisis has made the global aluminium market even more turbulent.

Based on the above findings, it appears that lifting the 10% tariff on EU aluminium exports to the US could help US importers and consumers by reducing costs, while at the same time have very little impact on US aluminium production.

Background

Along with this assessment, the JRC report reviews extensively the historical trends of the EU aluminium industry per product groups in terms of production, profitability and trade performance, and presents a detailed overview of the US aluminium tariff policy as well as an assessment of the impact of the covid-19 crisis, with a geographical focus on US and EU.

The JRC Report introduces also an econometric model developed by the JRC that can be applied to any category of products for modelling trade flows between countries or trading-blocks/regions of the world and for short-time forecasting and analysing the effects of trade measures (import price variations).

The EU aluminium industry

The EU aluminium industry, consisting of aluminium production and casting of light metals, directly employed 215,000 people and had an annual turnover of EUR 61.5 billion in 2018, creating benefit of EUR 14.6 billion.

Over the period 2014-2018, EU’s annual average exports of extra-tariffed aluminium products to the extra-EU countries were around 11.5 billion USD.

The United States was the second destination of EU exports, after the UK, with a share of around 15% in 2018. US imports of the extra-tariffed aluminium product group rose by 41% in 2018 relative to 2014, from 14 billion USD in 2014 to 19.7 billion USD in 2018.

In 2019, the total US value of imports declined relative to the previous year by 9%, in nominal terms. EU countries such as Germany, France, Austria, and Italy are important suppliers of the extra-tariffed aluminium product aggregate to the US.

Related Content

JRC Science for Policy Report: The aftermath of US tariffs on aluminium imports

Details

Publication date
20 July 2021