03/13/2025
From our supplier on Tariffs...
Why is President Trump adjusting the current Section 232 tariffs on Aluminum effective March 12?
1. How does this affect Senox customers? It does not directly because we do not import foreign metal, therefore we will not be charged this tariff. Pricing is affected indirectly due to it being based on global commodity market pricing. We buy our metal domestically where the mill charges us the market price (MWP+LME) + mill contract price (which is set once a year in January). Changes in our monthly pricing reflect fluctuations in 1. commodity price and 2. our overhead such as labor wages, paint, packaging, freight, and other manufacturing costs.
2. Section 232 tariffs have been in place since 2018. During his first term, after an investigation in 2018 found that aluminum was being imported in quantities that threaten national security, President Trump imposed a 10% tariff on aluminum articles imported from most countries.
a. This tariff only applied to the primary and secondary level of material, but not tertiary; for example, it applied to imported ingots & coils but not miters.
b. There were exceptions available if an aluminum article was not produced in the USA in a sufficient and reasonably available amount, or of satisfactory quality.
c. Certain countries were exempt, including Canada and Mexico, after engaging in mutual agreements regarding trade.
3. Why is the Section 232 tariff changing now? President Trump has found that aluminum imports have continued at unacceptable levels despite the 10% tariff currently in place, causing current domestic aluminum smelter capacity utilization rates of 52% in 2024, a decrease of 30% since 2020, where the target is 80%. This is a threat to our National Security.
How did this happen under the current 10% tariff?
a. Exclusion of certain countries and products
b. Efforts by foreign producers to circumvent the tariff have undermined the tariff’s purpose - to help domestic aluminum smelters be able to increase their utilization rates and add new capacity for the USA.
c. Foreign producers have shifted assembly or manufacturing operations to third countries. There has been a significant increase in investment by China in Mexico, who had an exemption to the tariff when sending metal into the USA and Mexican producers are using unfair trade to gain market share in the USA by leveraging their access to unfairly traded global primary aluminum from China and Russia to do so.
The result of these original rules:
a. Two primary aluminum smelters in the USA have closed since 2018. At the same time global primary aluminum capacity has increased.
b. The average volume of imports from countries that were excluded has increased 20%, despite demand that generally remained flat. Specifically, imports from Canada are 18% higher while Mexico’s are 35% higher.
c. This combination weighs on the price domestic aluminum smelters can charge, decreasing their smelter utilization rate.
The new rules:
d. Now, the original 10% tariff with some exceptions is no longer enough. President Trump has increased the tariff on all aluminum imports to 25% (and Russia remains at 70%) with no exceptions for any country or product this time, including tertiary products.
e. There is a provision in the President’s Proclamation “Adjusting Imports of Aluminum into the United States 10895” that states tariffs “shall not apply to derivative aluminum articles processed in another country from aluminum articles that were smelted and cast in the United States.” https://public-inspection.federalregister.gov/2025-02832.pdf.
Sincerely,
Nicole Budworth
CEO
