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Aluminum Tariffs Will Create Jobs and Economic Investment Says Group

Aluminum Tariffs Will Create Jobs and Economic Investment Says Group

Dec. 21, 2018
"In the next few years, we should see thousands of jobs created and billions of dollars in aluminum production, due to the Section 232 tariffs," says Robert Scott of the Economic Policy Institute.

Robert Scott, who is the director of trade and manufacturing policy research for the Economic Policy Institute, has looked at the numbers and concluded that the aluminum tariffs have helped the aluminum industry.

In his report he notes that between 2010 and 2017, 18 of 23 domestic aluminum smelters shut down, eliminating roughly 13,000 domestic jobs. In 2016, there were three alumina refineries supplying U.S. smelters; by 2017, only one remained in operation

But in 2017 things started to turn around when the Commerce Department launched Section 232 investigations to determine whether aluminum (and steel) imports were a threat to national security, says Scott..2

“The estimates of the jobs lost and the economic harm done by the steel and aluminum tariffs have been wildly overblown,” said Scott. “In fact, the tariffs have shown to be a net-positive to the economy. In the next few years, we should see thousands of jobs created and billions of dollars in aluminum production, due to the Section 232 tariffs. ”The report shows that the domestic producers of both primary aluminum and downstream aluminum products have made commitments to create thousands of jobs, invest billions of dollars in aluminum production, and substantially increase domestic production.

Here are some specific results from the tariffs:

--  U.S. primary aluminum production is projected to increase by 67% (500,000 tons per year) between 2017 and the end of 2018. Three smelters are being restarted, and another has announced a capacity expansion. Seven smelters in total will be in operation by the end of 2018. These restart and expansion projects will create over 1,000 new jobs and generate over $100 million in new investment.

-- Since Section 232 tariffs were imposed, 22 new and expansion projects have been announced in downstream aluminum industries producing extruded (rod and bar, pipe and tube, and extruded shapes) and rolled (sheet and plate) products. These new and expanded facilities will employ over 2,000 additional workers, generate $3.3 billion in new investments, and add nearly 1,000,000 tons of annual rolling and extrusion capacity to the downstream, domestic aluminum industry.

-- In the year-to-date period of January through October 2018 (compared with the same period in 2017), shipments of all extruded products are up 6.3% (279.8 million pounds), and total sheet and plate shipments have increased by 4.6% (336.4 million pounds). Those figures are for total North American shipments (including the United States and Canada). Industrial production data show that these trends are even stronger in the United States.

-- The Federal Reserve’s industrial production data provide estimates of real output, based on measures of physical output, or (where output data are not available), total production-worker hours, by industry. U.S. output of raw alumina and refined & processed aluminum increased 9.8 percent between February 2018 (before tariffs were imposed) and October 2018 (data are for the four-digit North American Industry Classification—NAICS—code 3313). Output of rolled and extruded aluminum products increased 9.1% from February to September 2018. Therefore, domestic (U.S.) producers appeared to outperform continental production for the U.S. and Canada, referred to above.

-- To date (February through October 2018), U.S. employment in the aluminum industries (primary and downstream) has increased slightly (by 300 jobs) since the tariffs were imposed. Aluminum production is highly capital-intensive, and restarting closed facilities is a costly and time-consuming process. Planned restarts and capacity expansions in both primary aluminum and downstream rolling and extruding mills will create more than 3,000 jobs, as shown below. 

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