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Investing.com -- According to Nikkei, the United States is set to implement additional aluminum tariffs, which will affect 123 product sectors, including chipmaking equipment and aircraft components. These tariffs, scheduled to take effect on March 12, are expected to hit Japanese companies that rely heavily on exports to America.
President Donald Trump signed an executive order on February 10 imposing an additional 25% tariff on steel and aluminum products. The specifics of this order, which were initially unclear, were outlined by the Federal Register on Tuesday.
The aluminum tariffs were first set at 10% in March 2018. However, the Secretary of Commerce has since reported to the President that aluminum imports into the U.S. have continued at levels deemed unacceptable, given the ongoing global aluminum excess capacity crisis. The Secretary also expressed that the initial 10% ad valorem tariff was insufficient to counter the threat posed to U.S. national security by the influx of aluminum imports.
A noted increase in global primary aluminum capacity, driven by expansions in China and South America, has resulted in a surge of aluminum imports. This has put downward pressure on the prices that domestic aluminum producers can charge. Chinese investment in Mexico has also seen a significant rise, fueled by extensive Chinese government subsidies and the continued exploitation of loopholes in U.S. trade policy.
These market conditions have forced domestic aluminum producers to idle additional production and close facilities. Since the initial tariff was imposed, two primary aluminum smelters within the U.S. have closed. U.S. primary aluminum production has also seen a decrease of 30 percent from 2020 to 2024, and U.S. smelter capacity utilization was only 52 percent in 2024.
In response to these issues, the Secretary has recommended limiting exemptions and increasing the tariff rate. Consequently, President Trump has signed an executive order to raise the tariff rate from 10 percent ad valorem to 25 percent ad valorem.
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