Wednesday, March 15, 2017

US Aluminum Going After China on Trade Issue

US Aluminum Going After China on Trade Issue by David Milberg

Not since the dreaded “Chinese drywall” fiasco have US industry insiders been this aggravated with China. After American producers filed a complaint against Chinese aluminum suppliers, these raw materials companies appealed to the Trump administration to opt out of imposing suggested sanctions.

But the Aluminum Association is not backing down, angry that, they say, the Chinese companies are selling aluminum at “unfairly low” prices that “hurt foreign competition.” In their legal complaint, the AA requested the US Commerce Department impose anti-dumping duties of between 38 and 134 percent on aluminum foil used in consumer and industrial applications.

In a statement to the Associated Press, Commerce Ministry official, Wang Hejun, said, “China hopes that the US side will not resort to trade remedies… We hope the two countries can resolve the concerns of both industries through dialogue and hope the US Department of Commerce will exercise caution and avoid harming mutual benefit.”

That might be a tough sell, especially to an already hostile Trump administration. China has been flooding Western markets, especially the United States, with cheaper building materials, putting US supply businesses at a distinct disadvantage. This is especially damaging in metal importing. Steel and aluminum are being imported much cheaper than they can be produced in the States, leading to smelters being closed down in the U.S. and Britain.

From a public relations perspective, this situation can play to the benefit of multiple US factions. Primarily, the Trump administration can use the complaint to bolster its claims that China is taking advantage of lax US trade policies that he needs to step in and mitigate. Meanwhile, US manufacturers can use this scenario to highlight their “Made in the USA” campaigns to encourage consumers and industries to “buy American.”

Trump already promised to raise duties on Chinese imports, and he could once again raise the subject of punitive tariffs against companies that drastically undercut American business. This would play exceptionally well with his base while providing a strong sign of support to American materials producers.

Meanwhile, the move could create some tension with American manufacturers that depend on the cheapest materials to keep costs down. With Chinese raw materials markets exploding in steel, coal, aluminum, and glass. Each of these markets is a potential point of contention for the administration and the various industries they supply.

So, the PR dynamics play both ways in this scenario, with US interests literally caught in the middle. Can they find a happy medium between keeping costs low, so their customers are happy and “making American” … so their customers are happy?

David Milberg is a financial analyst in NYC. He is a long-time owner of Milberg Factors, a factoring and finance company with locations in New York, California, and North Carolina.

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