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Alcoa Seeks Waivers From US Tariffs

Aug. 7, 2018
Alcoa filed five requests with three being for aluminum that it said was unavailable from U.S. producers, and two for metal that can’t be made in sufficient quantity domestically.

Alcoa Corp., the American aluminum maker that supplies metal used in everything from Coca-Cola cans to Boeing Co.’s 747 jetliner, is seeking relief from U.S. tariffs meant to help it.

Alcoa filed five requests to the U.S. Commerce Department on August 6 asking for waivers from the administration’s 10% tariff on imports of the lightweight metal.

Three of the requests are for aluminum that it said was unavailable from U.S. producers, and two are for metal that can’t be made in sufficient quantity domestically. The one-year requests cover 39,500 metric tons, with Alcoa’s Canadian subsidiary listed as the source of the metal.

The appeals come less than three weeks after Pittsburgh-based Alcoa said it was lowering its 2018 profit projection, in part because of tariff costs on material it makes mostly in Canada and ships to the U.S. In an interview last month, Alcoa CEO Roy Harvey called the tariffs a “ significant” headwind. The aluminum slabs covered by the requests would be processed at the Warrick plant in the U.S.

“We filed these requests to ensure our Warrick facility can meet its commitments and better compete domestically and on an export basis,” Tim Reyes, president of Alcoa Aluminum, said in an emailed statement. “Even if all the curtailed smelting capacity in the states was back online and producing metal, the U.S. would still need to import the majority of its aluminum, and most of it from Canada.”

Tariffs have meant Alcoa pays more to get metal from its foreign subsidiaries into the U.S., even though the company benefits from inflated premiums added to the price of the metal to deliver it to the U.S. Midwest. The company said in its second-quarter earnings report that it incurred $15 million in costs on material shipped to the U.S. Alcoa produces more aluminum in Canada than it does in the U.S.

Harvey has said that Canada shouldn’t be included in the import tariffs, which President Donald Trump put in place this year under the seldom-used Section 232 of the Trade Expansion Act that considers whether importation has implications for national security. As of July 23, the Commerce Department had received more than 28,700 steel and aluminum exclusion requests and posted 1,150 total decisions, according to the agency.

“We have three important and large smelters going up the St. Lawrence River, and much of that material comes into the U.S.,” Harvey said in an interview with Bloomberg on July 18. “Everyone assumed as did we that there would be an exception in place for Canadian production, so that has turned out not to be the case and that is a pretty significant impact for us.”

By Joe Deaux

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Licensed content from Bloomberg, copyright 2016.

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