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May 1, 2017

Addressing Overcapacity: President Trump Signs Aluminum Executive Order

President Donald Trump last Thursday issued a second Section 232 executive order. This one will require the U.S. Commerce Department to investigate whether imports of aluminum threaten U.S. national security. (As Connecting the Dots reported last week, President Donald Trump previously issued a section 232 executive order to address steel overcapacity. The Commerce Department will hold its first hearing on this matter starting at 10 .m. on May 24th, and will accept written comments from interested parties through May 31st.) 

Like the steel executive order, this one directs the Commerce Department to complete its investigation as “soon as possible” and in a similar manner to the steel investigation. The investigation must be concluded and a report submitted within 270 days and will look at whether aluminum imports:

  • Impair the ability of the domestic aluminum industry to meet our national defense needs;
  • Have any substantial effects on employment or government revenue; and
  • Weaken the U.S. economy.

According to the White House, if aluminum imports are found to impair the national security of the United States, President Trump will have 90 days to determine what action should be taken to remedy that harm. In its announcement, the White House noted:

  • In 2016, aluminum imports into the United States increased by 18 percent while American production fell by 47 percent.
  • Of the eight aluminum smelters based in the United States at the beginning of 2016, seven have either shutdown, reduced production, or are idled.
  • From 2012 to 2015, imports of semi-fabricated aluminum from China grew by 183 percent.
  • Imports of aluminum foil from China have grown from zero percent of the United States market in 2004 to 22 percent today.
  • Employment in the aluminum industry fell by nearly 13 percent from 2015 to 2016.

Commerce Secretary Wilbur Ross explained how aluminum overcapacity relates to national security. In a briefing with reporters, he said, “[I]mports have been flooding into the aluminum industry and the defense angle is that high-purity aluminum is used in the F-35.” At this writing it is not clear how this investigation could impact the pending World Trade Organization case filed by the Obama administration challenging Chinese aluminum subsidies.

U.S. Commerce Secretary Ross has suggested that more section 232 national security investigations are being considered for industries such as semiconductors and shipbuilding.