FACT CHECK: What Does Your Beer Can Have To Do With National Security?
After President Donald Trump proposed tariffs on steel and aluminum Thursday, MillerCoors claimed that the Department of Defense (DOD) doesn’t think that aluminum imports threaten national security.
MillerCoors statement: We are disappointed with President Trump’s announcement of a 10% tariff on aluminum. While we won’t know the details for a week, the Department of Defense recently reported that aluminum does not cause any national security issues. (1/3)
— MillerCoors (@MillerCoors) March 1, 2018
“The Department of Defense recently reported that aluminum does not cause any national security issues,” the company tweeted.
The DOD said that aluminum sold to the U.S. using unfair trading practices poses a threat to national security, although there is enough material produced in the U.S. to meet current defense needs.
Trump announced Thursday that he plans to impose a 25 percent tariff on steel and a 10 percent tariff on aluminum. The announcement came two weeks after the Department of Commerce released a report finding that steel and aluminum imports threaten national security.
Many companies and industry groups condemned the proposal, saying that it will make materials more expensive and threaten jobs. Jim McGreevy, president and CEO of the Beer Institute, warned that the tariff could result in the loss of 20,000 jobs and echoed MillerCoors’ sentiment.
The tariff “will increase the cost of aluminum in the United States and endanger American jobs in the beer industry and throughout the supply chain,” he said in a statement. About half of the production cost of a beer can is due to the cost of the aluminum.
Contrary to MillerCoors’ claim, however, a memo from the DOD concurred with the Commerce Department‘s findings. “Imports of foreign steel and aluminum based on unfair trading practices impair the national security,” Secretary of Defense James Mattis wrote in the memo.
The big problem, the DOD said, is that Chinese overproduction of steel and aluminum is upsetting global markets. Public officials and trade organizations accuse China of dumping – subsidizing steel and aluminum in order to flood the market at artificially low prices so that other producers cannot compete.
The European Union passed targeted measures to address dumping in November. While more specifics will be released in the near future, Trump’s proposed tariffs could be more sweeping.
Trump can impose the tariffs under the rarely-used section 232 of the Trade Expansion Act, which allows the president to take action if an import threatens national security. “We need great steel makers, great aluminum makers for defense,” Trump said.
The national security argument in favor of tariffs is that the U.S. needs to be able to produce domestic steel and aluminum for weapons and equipment rather than having to rely on imports. Cheap imports threaten domestic production, and the thought is that tariffs will cause more steel and aluminum to be made in the U.S.
The defense industry uses aluminum on armored vehicles, aircraft, naval vessels and missiles. But the government does not keep a stockpile of aluminum, and domestic aluminum production is rapidly declining.
U.S. aluminum production in 2016 was less than half of what it was in 2013. Six aluminum smelters have shut down since 2012, and only five remain. About 90 percent of primary aluminum (newly produced, not recycled) is imported.
However, the DOD doesn’t think that “the findings in the reports impact the ability of DOD programs to acquire the steel or aluminum necessary to meet national defense requirements,” and recommended that if the administration imposes tariffs on steel that it hold off on doing the same for aluminum.
Canada, a close ally, is the top source for aluminum, accounting for 41 percent of all U.S. aluminum imports.
The commerce report analyzed only imports of primary aluminum, not scrap or recycled aluminum. Aluminum can sheet, used to make beverage cans, is made of around 30 percent primary aluminum and 70 percent scrap metals and recycled cans.
Some accuse Trump and Commerce Secretary Wilbur Ross of using national security as an excuse to impose tariffs when the imports do not pose any imminent threat. Although the defense industry is easily able to obtain steel and aluminum for weapons and equipment, Ross argues that unfair imports are a national security threat because they weaken the economy.
“It isn’t just military defense, that part is a small percentage of steel, but it also includes the impact on the economy overall, it specifically includes the impact on jobs, includes the impact on infrastructure, all kinds of things that you would not necessarily think are national security, but the truth is economic security is national security,” he said on ABC’s “This Week.”
MillerCoors did not respond to a request for comment.
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