Cheap Chinese aluminum is a national security threat
Tuesday, May 9, 2017
From the Chicago Tribune:
Cheap Chinese steel has upset U.S. steel producers for years, as Chinese manufacturers have unloaded excess capacity on world markets at unbeatably low prices. The Trump administration has even invoked the supposed threat to national security from cheap imports to threaten trade restrictions on steel imports.
But the United States has plenty of steel-manufacturing capacity to meet its defense needs. What's genuinely threatened, however, is another sector altogether: Aluminum. A glut of cheap Chinese aluminum has done more than hollow out that industry; it may also actually be jeopardizing national security.
Since China joined the World Trade Organization (WTO) in 2001, cheap Chinese aluminum has flooded American markets, closing factories and putting people out of work. The number of aluminum smelters in the United States has fallen from 23 to five in that time. Eight smelters have either shut down or scaled back operations since 2015, and about 3,500 aluminum jobs have disappeared in the last 18 months alone.
A bigger worry, however, is national security. High purity aluminum is used to make certain kinds of jets, such as Boeing's F-18 and Lockheed Martin's F-35, as well as armored vehicles. But the United States now has just one domestic manufacturer of high purity aluminum left - Century Aluminum's Hawesville, Ky. plant, which is currently operating at 40 percent capacity amid dropping prices.
The prospects for importing high purity aluminum, from a geopolitical risk standpoint, aren't friendly; only a few smelters in the world produce it, and those are located mostly in Russia, the Middle East, and China.
The situation prompted the Trump administration to launch a probe into aluminum imports on April 26, after launching a similar probe on steel earlier in the month.
"It's very, very dangerous, obviously, from a national defense point of view, to only have one supplier of an absolutely critical material," said Secretary of Commerce Wilbur Ross at an April 26 press briefing.
The probe invokes a portion of a Cold War-era law, known as section 232, which permits special protections for smelting in industries key to national security. The investigation would determine whether or not the United States produces enough high purity aluminum to meet its needs during wartime.
"You're really left with just a kernel of the industry," Jesse Gary, executive vice president and general counsel for Century Aluminum, told Foreign Policy. "Century Aluminum is only running at 40 percent capacity. As Secretary Ross mentioned, we truly are on the precipice of losing that smelter." Read more...