Below are frequently asked questions (FAQs) regarding the Fair Trade Initiative. Answers are provided by AEC President Rand Baldwin, CAE.
In a nutshell, what is the Fair Trade Initiative all about? Imported aluminum was allowing companies sourcing product from China to sell at a lot less than American made. It’s pretty recent, a year or two ago, right? Who was behind getting this tariff passed?
This is about Fair Trade. Open markets. Competition. The government of China, in hoping to rapidly build industry and jobs in China, targeted certain industries for worldwide domination. They have the capacity and the intent to supply the entire world's demand for extruded aluminum. Their method, however, is to import to the United States and other countries using trade practices that the U.S. International Trade Commission considers improper and illegal. Our industry and the AEC brought a trade action in 2010 in order to re-establish a level playing field for all competitors, regardless of country of origin. Other countries, such as Canada and Australia, and other industries, such as steel and solar energy systems, have done likewise.
Have there been any changes since the tariff was imposed, for example are American made products now getting a larger market share? Do people see this as fair, unfair, or a necessary evil, etc?
The tariff was pretty steep, like 400%? Is that higher than most tariffs?
The original determination by the USITC and Dept of Commerce placed the tariff at 412% of product value for most importers. These agencies have completed a review of this number and have, correctly we believe, determined the tariffs should be reset. We expect lower values, between 40% and 75% to be the new numbers.
Is the aluminum coming from China the same quality as that made here? Could you say it might help product quality standards, since American manufacturers won't cut corners to try to cut expense?
Yes. As a general rule, we believe that Chinese extrusions and the aluminum used as raw material, is of quality similar to that in the U.S. and elsewhere. On the other hand, as your question implies, a level playing field (such as we have had for the past two years now) is consistent with the focus on product reliability and quality that has long been the hallmark of this industry. Aluminum extruders make parts for cars, planes, buildings, machinery, etc. All of which must be operated with the utmost of efficiency and with the safety of those involved as a vital consideration.
If I'm a retailer selling products made with aluminum extrusions, what specifically does that mean for me? Do you have any insight on how this affected the extension market?
Generally, what Fair Trade means for retailers is that the U.S. market is protected (for now) from being dominated by a single supply source. In the short run, this returned prices to their fair market values. In the long run, this protects fair and competitive pricing and high quality.
Are people trying to "get around this" somehow?
The overwhelming majority of the importers and retailers are playing by the rules. Unfortunately, there are a few who have tried to circumvent the tariffs illegally. Those who try to do so are taking a huge risk. Those caught, such as the five persons indicted in June 2013 in San Juan, face significant fines and prison time. By contacting the U.S. Department of Commerce, businesses can legally determine whether their particular imported product is or should be subject to the tariffs.