U.S. Slaps Duties on China Aluminum Foil as Xi Ally Arrives

(Bloomberg) -- The U.S. Commerce Department slapped stiff duties on aluminum foil from China after concluding that the country's producers are receiving unfair subsidies and dumping the product in the American market.

Duties from 49 percent to 106 percent will be imposed on Chinese aluminum foil for selling the product in the U.S. below fair market value, the department said in a statement Tuesday. The Trump administration also set duties of 17 percent to 81 percent for the unfair subsidies that the U.S. has concluded Chinese producers receive.

The issue now goes before the U.S. International Trade Commission, which is expected to have the final say on the injury claims in a vote scheduled for March 15, the Aluminum Association, which is based in Virginia, said in an emailed statement on Tuesday.

The ruling by Commerce adds to tensions between the U.S. and China, which has rejected the claim that it gives its aluminum producers an unfair advantage. The decision comes the same week as President Xi Jinping's top economic adviser, Liu He, is expected in Washington for discussions over the two nations' trading and economic relationship.

High-Level Meetings

Liu will meet with White House economic adviser Gary Cohn, Treasury Secretary Steven Mnuchin and U.S. Trade Representative Robert Lighthizer, according to White House Press Secretary Sarah Sanders. He will not see President Donald Trump during this trip.

“U.S. aluminum foil producers are among the most competitive producers in the world, but they cannot compete against products that are sold at unfairly low prices and subsidized by the government of China,” Heidi Brock, chief executive officer of the Aluminum Association, said in an emailed statement.

The U.S. has overlooked World Trade Organization rules and "severely impaired the interests of Chinese aluminum foil exporters; China is strongly dissatisfied," Wang Hejun, a senior Commerce Ministry official, said in a statement Wednesday. U.S. companies chose to quit the low-value added aluminum production more than two decades ago, resulting in shrinking output and market share, according to Wang.

"The U.S. has unreasonably, excessively employed trade-remedy measures. It would not help ‘rejuvenate' the American aluminum foil industry. Instead, it will affect employment in the U.S. and hurt the interests of American consumers," he said, adding that China will take necessary measures to defend its legitimate rights.

Aluminum Tariffs

In pursuit of tougher trade rules, Trump is considering a range of recommendations to curb steel and aluminum imports after the Commerce Department found they threaten national security. The president has until mid-April to make his decision on potential actions, which could include imposing tariffs and quotas on the metals.

The administration in November took the rare step of initiating an anti-subsidy and anti-dumping investigation into Chinese aluminum alloy on behalf of the domestic industry, a move usually led by companies.

The U.S. is joined with Europe and other Asian nations over concerns that China's excess industrial capacity is distorting prices on the global markets.

Protection Measures

U.S. aluminum foil producers have been exerting pressure for protections over what they say is unfair foreign competition. A surge in cheap Chinese imports from 2006 “decimated” prices for foil in the U.S., according to Beatriz Landa, vice president at Novelis Corp., which makes aluminum products. “We cannot continue to reduce prices on our product offerings and remain sustainable,” Landa said at an ITC hearing on the case in Washington this month.

A spokeswoman for the Chinese metals industry, Xinda Mo, said at the hearing that the aluminum market in both countries has been shaped by independent investment decisions by companies, market demand and shifts in supply dynamics.

U.S. imports of aluminum foil from China were an estimated $389 million in 2016, according to Commerce.

The administration has doubled down on stricter trade enforcement. New investigations into dumping and countervailing duties cases rose by 60 percent during Trump's first year in office, according to the White House's 2019 budget proposal document.

China said Tuesday it decided to stop levying anti-dumping and anti-subsidy duties on chicken products from the U.S. The Asian nation has repeatedly targeted the American poultry sector since 2010, effectively in retaliation against U.S. tariffs on Chinese tires.

To contact Bloomberg News staff for this story: Andrew Mayeda in Washington at amayeda@bloomberg.net, Joe Deaux in New York at jdeaux@bloomberg.net, Miao Han in Beijing at mhan22@bloomberg.net.

To contact the editors responsible for this story: Brendan Murray at brmurray@bloomberg.net, Sarah McGregor at smcgregor5@bloomberg.net, Jeffrey Black, Jeff Kearns

©2018 Bloomberg L.P.

With assistance from Andrew Mayeda, Joe Deaux, Miao Han