Trump Cuts Aluminum Tariffs by Half for Companies Building US Factories

▲ President Donald Trump

U.S. President Donald Trump signed a proclamation on July 20 (local time) to cut import tariffs on aluminum by half for companies that build or expand production facilities in the United States.

In the proclamation, President Trump stated that he determined it is "necessary and appropriate to establish an incentive program for companies that invest in new primary aluminum (aluminum produced for the first time by refining ore and then electrolyzing it) production capacity in the United States."

President Trump ordered that for companies whose "onshoring" plans are approved by the U.S. Department of Commerce, half of the tariff rate under Section 232 of the Trade Expansion Act will be applied annually to imports of primary aluminum equivalent to the projected annual production volume of those facilities.

Section 232 of the Trade Expansion Act allows the president to impose import restrictions if it is determined that imported products threaten U.S. national security.

The United States has used this provision to impose tariffs on steel, aluminum, automobiles, and automotive parts.

The current tariff on aluminum is 50 percent.

Previously, Secretary of Commerce Howard Lutnick recommended that incentives be provided to companies that build new facilities to produce primary aluminum in the U.S., expand existing facilities to enable primary aluminum production, or renovate aging primary aluminum production facilities to increase output or improve production efficiency.

Secretary Lutnick’s view was that domestic production and supply of primary aluminum, which is essential to the U.S. economy and defense industrial base, remain insufficient, and therefore the tariff system should be adjusted to promote the production and supply of aluminum.

Although President Trump did not mention a specific background, given that Secretary Lutnick cited the "defense industrial base," it is interpreted that the move is not unrelated to the situation where aluminum prices are soaring due to the war with Iran and the need to secure a sufficient supply of aluminum for U.S. military production.

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