(Bloomberg) -- The U.S. Commerce Department slapped stiff duties on aluminum foil from China after concluding that the country’s producers are receiving unfair subsidies and dumping the product in the U.S.
The U.S. is imposing duties from 49 percent to 106 percent on Chinese aluminum foil for selling the product in the U.S. below fair market value, Commerce said Tuesday in a statement. The Trump administration also set duties of 17 percent to 81 percent for the unfair subsidies that the U.S. has concluded Chinese producers receive.
The issue now goes before the U.S. International Trade Commission, which is expected to have the final say on the injury claims in a vote scheduled for March 15, the Aluminum Association, which is based in Virginia, said in an emailed statement on Tuesday.
“U.S. aluminum foil producers are among the most competitive producers in the world, but they cannot compete against products that are sold at unfairly low prices and subsidized by the government of China,” said Heidi Brock, chief executive officer of the Aluminum Association.
Trade Tensions
The ruling is likely to add to tensions between the U.S. and China ahead of this week’s visit to Washington by top Chinese adviser, Liu He, for talks on the two nations’ trading and economic relationship. China’s Ministry of Commerce said Wednesday it’s “strongly dissatisfied” with the duties, which it said disregard World Trade Organization rules and are being imposed without any evidence.
“This irrational and excessive use of trade remedies by the U.S. side may help revive the U.S. aluminum foil industry, but it will affect employment in the U.S. and damage the welfare of its consumers,” Wang Hejun, director of the trade remedy and investigation bureau at the ministry, said in a website statement. Aluminum foil accounted for about one fifth of China’s total aluminum exports to the U.S. last year, according to Chinese customs.
Shandong Hongchuang Aluminum Industry Holding Co., a major Chinese aluminum foil producer, fell 1.4 percent in Shanghai, taking losses over the past year to 39 percent.
In pursuit of tougher trade rules, President Donald Trump is considering a range of broader recommendations to curb steel and aluminum imports after the Commerce Department found they threaten national security. The president has until mid-April to make his decision on potential actions, which could include imposing tariffs and quotas on the metals.
Exerting Pressure
The administration in November took the rare step of initiating an anti-subsidy and anti-dumping investigation into Chinese aluminum alloy on behalf of the domestic industry, a move that companies usually lead.
The U.S. is joined with Europe and other Asian nations over concerns that China’s excess industrial capacity is distorting prices on the global markets.
U.S. producers of aluminum foil have been exerting pressure for protections over what they say is unfair foreign competition. A surge in cheap Chinese imports from 2006 “decimated” prices for foil in the U.S., according to Beatriz Landa, vice president at Novelis Corp., which makes aluminum products. “We cannot continue to reduce prices on our product offerings and remain sustainable,” Landa said at an ITC hearing in Washington this month.
At the same hearing, a spokeswoman for the Chinese metals industry, Xinda Mo, said the aluminum market in both countries has been shaped by independent investment decisions by companies, market demand and shifts in supply dynamics.
U.S. imports of aluminum foil from China were an estimated $389 million in 2016, according to Commerce.
The Trump administration has doubled down on stricter trade enforcement. New investigations into dumping and countervailing duties cases rose by 60 percent during Trump’s first year in office, according to the White House’s 2019 budget proposal document.
(Updates with China’s response in fifth paragraph.)
