U.S. Seeks Import Duties on Chinese Aluminum Foil

The U.S. said it would seek to impose duties on imports of aluminum foil from China, arguing that state subsidies for the domestic industry unfairly disadvantage American producers.

U.S. Secretary of Commerce Wilbur Ross announced the “affirmative preliminary determination” late Tuesday in Washington following an investigation into the practices of Chinese makers of the material. Subsidies of as much as 81 percent were found to be in place, according to a fact sheet released on the department’s website.

If carried through, the duties could ratchet up trade tension between the world’s two largest economies, as Trump administration efforts to shrink the trade deficit with China have borne little fruit. President Donald Trump is considering a formal investigation into China’s alleged intellectual property abuse and his administration is scrutinizing imports of steel and aluminum on national security grounds. Tuesday’s decision is unrelated to that probe.

“The United States is committed to free, fair and reciprocal trade, and will continue to validate the information provided to us that brought us to this decision,” Ross said in the statement. "The Trump administration will not stand idly by as harmful trade practices from foreign nations attempt to take advantage of our essential industries, workers, and businesses.”

Cash Deposits

The decision is still to be confirmed by a final department ruling by October and a determination by the U.S. International Trade Commission. U.S. Customs and Border Protection will be instructed to collect cash deposits based on the preliminary rates for aluminum foil being imported.

“Aluminum has become a hot spot in China-U.S. trade in recent years, as Chinese output of aluminum products has surged a lot, and its exports increased very fast, which has raised eyebrows from trading partners,” said Yang Rongzhen, a professor at the China Institute for WTO Studies at the University of International Business and Economics in Beijing. “This is just one of several cases the U.S. has launched, but it is still within the normal trade frictions. I wouldn’t say this is a trade war.”

In January, the U.S. filed a complaint with the World Trade Organization alleging Chinese subsidies to domestic aluminum producers are suppressing global prices of the metal.

The U.S. aluminum foil production industry accounts for $6.8 billion in economic activity annually, the Aluminum Association, a trade group, said in a statement it released in support of the Commerce Department findings.

U.S. production accounts for 69 percent of all domestic aluminum foil demand, down from about 84 percent 12 years ago, the Arlington, Virginia-based group said. During the same period, Chinese imports grew from essentially zero to 22 percent of the total U.S. aluminum foil market market today, it said.

Companies Named

Five companies were singled out in the report, which found effective subsidy rates ranging from 16.56 percent in the case of Jiangsu Zhongji Lamination Materials Co. and 28.33 percent with Dingsheng Aluminum Industries Trading Co., to 80.97 percent at Loften Aluminium Ltd., Manakin Industries LLC and Suzhou Manakin Aluminum Processing Technology Co.

Chen Hong, founder of Suzhou Manakin in Jiangsu province, said by telephone that he’s disappointed with the findings and is talking with U.S. lawyers about his options, adding that he’s not optimistic the decision can be overturned. If levied, the duties would hurt the U.S. packaging industry and costs would be passed on to U.S. consumers, he said.

An employee who answered the phone at Dingsheng Aluminum said executives weren’t available and that she couldn’t comment on the issue. Zhongji Lamination, Loften Aluminium and Manakin Industries didn’t respond to requests for comment or weren’t reachable.

"Trade frictions between China and the U.S. have been frequent, and will remain in the future," said He Weiwen, a senior fellow at the Center for China and Globalization in Beijing and a former economic and commercial counselor at Chinese consulates in New York and San Francisco. "But there’s still not a full-fledged trade war. The spats over specific products, however, are going to be represented in more complicated ways."

— With assistance by Jeff Black, Miao Han, and Joe Deaux