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American Resources Policy Network
Promoting the development of American mineral resources.
  • Section 232 Tariffs on Aluminum and Steel on the Way Out?

    News headlines these days are full of doom and gloom. As the Guardian writes, “whether or not the world really is getting worse, the nature of news will interact with the nature of cognition to make us think that it is.”

    Against this backdrop, it’s nice to see a little – albeit cautious – optimism spread around here and there. In this particular case, it’s coming via our neighbors to the North. According to the Canadian Government, officials are hopeful that the so-called Section 232 tariffs on aluminum and steel imposed by the Trump administration last year, which were in turn followed by retaliatory tariffs by Canada, are on the way out.

    While government representatives have been cautioning that Canadian ratification of the USMCA, the new U.S.-Mexico-Canada trade deal to replace NAFTA struck in 2018 might be delayed if the “the situation with respect to steel and aluminum is not yet resolved,” David McNaughton, Canada’s ambassador to the United States, has expressed optimism that “we’ll get there in the next few weeks.”

    As a Mercatus Center study showed late last year, the tariffs “appear to have been far more destructive to domestic industry than the administration anticipated.”

    As a result, more than 45 groups representing a wide range of business sectors renewed their call for an end on the Section 232 tariffs in 2019 in a coalition letter sent to U.S. Secretary of Commerce Wilbur Ross and U.S. Trade Representative Robert Lighthizer in January, arguing that

    “for many farmers, ranchers and manufacturers, the damage from the reciprocal trade actions in the steel dispute far outweighs any benefit that may accrue to them from the USMCA. The continued application of metal tariffs means ongoing economic hardship for U.S. companies that depend on imported steel and aluminum, but that are not exempted from these tariffs. Producers of agricultural and manufactured products that are highly dependent on the Canadian and Mexican markets are also suffering serious financial losses.”

    Both from an economic and national security perspective, doing away with the tariffs would be beneficial to all parties involved. Followers of ARPN will recall last year’s Defense Industrial Base Report listing nearly 300 weak links in the U.S. defense supply chain and stating that “a key finding of this report is that China represents a significant and growing risk to the supply of materials deemed strategic and critical to U.S. national security.” This includes Aluminum.

    When viewed in isolation and from the upstream end of the supply chain at the minesite, the U.S. is increasingly import-dependent for the aluminum it needs — and Canada, in the context of a long-standing integrated North American supply chain, has long been instrumental in helping the U.S. close the significant domestic production shortfall.

    As ARPN’s Dan McGroarty has pointed out in a piece for The Hill:

    “Particularly in the case of Canada, the U.S. tariffs ignore nearly 80 years of deep defense cooperation with our northern neighbor: Aluminum produced in Canadian smelters was central to the Allied war effort throughout World War II, during which the massive plant at Saguenay, Quebec supplied more than 40 percent of the Allies’ overall aluminum production. Today, Saguenay aluminum is on the U.S. tariff list.

    With agreement on USMCA, it’s time to reaffirm the importance of an integrated U.S.-Canadian Defense Industrial Base. As the Government of Canada’s official comments on the 232 inquiry noted, ‘open aluminum trade with Canada benefits the U.S. economy and its national security.’ With aluminum on the U.S. Critical Minerals List, with the U.S. producing only 39 percent of the aluminum it uses each year and Russia and China among our leading suppliers, it makes no sense to slap a 10 percent aluminum tariff on Canada.”

    Here’s hoping the Canadian government’s optimism is not misplaced.

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  • Metals in the Spotlight – Aluminum and the Intersection between Resource Policy and Trade

    While specialty and tech metals like the Rare Earths and Lithium continue to dominate the news cycles, there is a mainstay metal that has – for good reason – been making headlines as well: Aluminum. 

    Bloomberg recently even argued that “Aluminum Is the Market to Watch Closely in 2019.” 

    Included in the 2018 list of 35 minerals deemed critical to the United States national security and economy, aluminum is the No. 1 material by annual DoD usage, and a shortage of aluminum metal was cited in a nonclassified defense study as having ‘already caused some kind of significant weapon system production delay for DoD.’ 

    The U.S. is home to significant bauxite deposits, from which aluminum is sourced, but we import a significant percentage of the aluminum consumed domestically.  Unlike with other metals and minerals, however, this represents a marked decrease in geopolitical risk, as most of our aluminum imports are sourced from one of our closest trading partners, Canada, which accounted for 56% of total aluminum imports from 2013-2016.

    While viewed in isolation and from the upstream end of the supply chain at the minesite, the U.S. is increasingly import-dependent for the aluminum it needs, but viewed in the context of an integrated North American supply chain between the United States and Canada, our neighbor to the North is helping the U.S. close a significant domestic production shortfall.

    Thus, many were startled by the Administration’s decision earlier last year to impose trade tariffs on Canadian-made aluminum and steel under Section 232 of the 1962 Trade Expansion Act.

    Followers of ARPN may recall that the USMCA, the new U.S.-Mexico-Canada trade deal to replace NAFTA struck in November 2018, had opened a window to drop these tariffs on steel and aluminum imports from Canada and Mexico, which stand in the way of a fully integrated North American defense supply chain and, particularly with regards to Canada, “ignore nearly 80 years of deep defense cooperation with our northern neighbor.”

    Unfortunately, the provision remained intact in the November agreement, prompting more than 45 groups representing a wide range of business sectors to renew their call for an end on the Section 232 tariffs in 2019.  In a coalition letter sent to U.S. Secretary of Commerce Wilbur Ross and U.S. Trade Representative Robert Lighthizer last week, the signatories argue that

    “for many farmers, ranchers and manufacturers, the damage from the reciprocal trade actions in the steel dispute far outweighs any benefit that may accrue to them from the USMCA. The continued application of metal tariffs means ongoing economic hardship for U.S. companies that depend on imported steel and aluminum, but that are not exempted from these tariffs. Producers of agricultural and manufactured products that are highly dependent on the Canadian and Mexican markets are also suffering serious financial losses.”  

    Meanwhile, on Capitol Hill, a bipartisan group of lawmakers are preparing draft legislation to strip the Administration of the tool it used to impose the above-referenced tariffs, which it is considering to use to implement further duties on car and car part imports.  

    According to Politico, the Bicameral Congressional Trade Authority Act, the draft bill’s working title, would strip the president of the unilateral power to “make a final determination on whether to levy import restrictions if a Commerce Department analysis determines that foreign imports are undermining U.S. economic interests in a way that poses a threat to national security,” by requiring congressional approval of any such tariffs proposed under Section 232.  If passed, the legislation would also require a retroactive vote to approve any tariffs imposed under Section 232 within the last four years — including the ones on aluminum and steel the USMCA negotiators failed to strike. 

    With the tariffs removed, the November USMCA agreement could well become a springboard to take the strategic North American alliance to a new level.”  

    Here’s hoping Washington will not fail America.  

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  • ARPN Expert Zeroes in on Issues Surrounding Uranium – an “Underappreciated Energy Source”

    In a new series for Capital Research Center, Ned Mamula, member of the ARPN expert panel, adjunct scholar in geosciences at the Center for the Study of Science, Cato Institute, and co-author of “Groundbreaking! America’s New Quest for Mineral Independence,” takes a closer look at Uranium – an “underappreciated energy source.”  In the four-part-part series, Mamula [...]
  • 2019 New Year’s Resolutions for Mineral Resource Policy Reform

    Out with the old, in with the new, they say. It‘s new year‘s resolutions time.  With the end of 2017 having set the stage for potentially meaningful reform in mineral resource policy, we outlined a set of suggested resolutions for stakeholders for 2018 in January of last year.  And while several important steps  were taken [...]
  • “Action Can’t Come Soon Enough” –  A Call for Comprehensive Resource Policy From a National Security Perspective

    As America gets back into the swing of things after suffering from a collective “post-Thanksgiving rut,” James Clad, former deputy assistant Secretary of Defense and current Senior Fellow at the American Foreign Policy Council in Washington, DC, provides a good  recap of why we need to get our resource policy house in order from a national security [...]
  • ARPN’s McGroarty for The Hill: With USMCA, Time to Take Strategic North American Alliance to the Next Level Has Arrived

    “Now that President Trump has won agreement to replace NAFTA with the USMCA — the new U.S.-Mexico-Canada trade agreement — he has an opportunity to build on that accomplishment, and broaden the benefits of trade to strengthen national security,” writes ARPN Principal Daniel McGroarty in a new op-ed for The Hill. The next step, says McGroarty, [...]
  • Lithium – Challenges and Opportunities Underscore Need for Domestic Resource Policy Overhaul

    In an interview with InvestingNews.com, Simon Moores, Benchmark Mineral Intelligence’s managing director and a member of the ARPN panel of experts, discusses challenges relating to Lithium – one of the key materials underpinning EV battery technology. Moores says that big challenges still lie in bringing new supply to the market, but the situation is not [...]
  • McGroarty in The Hill: Copper Should Be Factored Into NAFTA “Auto Rules of Origin” Negotiations

    In a new piece for The Hill, American Resources Policy Network principal Daniel McGroarty zeroes in on the intersection between trade and resource policy. Against the backdrop of the current negotiations to update the North American Free Trade Agreement (NAFTA), McGroarty argues that one of the metals ARPN followers have come to know as a [...]
  • Mamula & Moore: Current Federal Policy Efforts Opportunity for “Huge Turnaround for Reducing Dangerous Mineral Imports Through Responsible Mining”

    In a new piece for National Review, geoscientist Ned Mamula, who is an adjunct scholar at the Center for the study of Science at the Cato Institute and a member of the ARPN panel of experts and Heritage Foundation senior fellow Stephen Moore offer up their take on the current – and long overdue – [...]
  • Green: Over-reliance on Foreign Mineral Imports “Fiscally Foolish and Politically Dangerous”

    In a new piece for The Hill, member of the ARPN expert panel and president and founder of Washington, DC-based government relations firm J.A.Green & Company Jeff A. Green stresses the national security risks associated with our over-reliance on foreign sources of supply for key mineral resources. Citing FBI Director Christopher Wray, who recently told [...]

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