FACT CHECK: Are Aluminum Prices Down Since Trump Enacted Tariffs?
President Donald Trump tweeted Friday that aluminum prices fell 4 percent despite his new tariffs.
Despite the Aluminum Tariffs, Aluminum prices are DOWN 4%. People are surprised, I’m not! Lots of money coming into U.S. coffers and Jobs, Jobs, Jobs!
— Donald J. Trump (@realDonaldTrump) April 6, 2018
“Despite the Aluminum Tariffs, Aluminum prices are DOWN 4%,” said the tweet.
Primary aluminum prices are down 4 percent since Trump’s tariff announcement on March 1, though prices are up compared to a year ago.
Trump appeared to reference a Wall Street Journal article from Thursday that reported primary aluminum prices were down 4 percent since the day his administration announced new tariffs on steel and aluminum.
Trump levied a 10 percent tariff on aluminum imports from all countries except Canada and Mexico after a Department of Commerce report found that unfairly priced steel and aluminum imports threaten national security. He signed the tariffs on March 8 and they took effect on March 23, including exemptions for a handful of other countries.
S&P Global Platts tracks prices of primary aluminum, which is aluminum that is produced from raw ore. The “all-in” price combines the London Metal Exchange global price of aluminum plus the U.S. Midwest Transaction Premium, which is S&P’s assessment of the extra cost of transporting aluminum to and within the U.S.
According to Platts, the all-in price of aluminum fell about 4 percent from 113.21 cents per pound on March 1 to 108.31 cents per pound on April 5, validating Trump’s 4 percent claim.
Though the overall price of aluminum is down slightly, that is due to global market prices being lower, not because of the tariffs. “The U.S. portion (our premium) is up dramatically,” Joseph Innace, metals/Americas content director at S&P Global Platts, told The Daily Caller News Foundation in an email. Year to date, the premium assessment has doubled, largely due to tariff fears and increased truck freight rates, he said.
The aluminum industry knew that the tariffs were coming long before Trump formally implemented them.
“By March 1, the market had already priced-in the [expected tariff] impact on primary aluminum on the Midwest Transaction premium,” Jorge Vazquez, founder and managing director at consulting firm Harbor Aluminum, told TheDCNF in an email. The firm found that the price of primary aluminum increased by 12.9 percent since last April when the Department of Commerce announced its investigation.
Harbor Aluminum also noted that prices for other aluminum products subject to the tariffs have gone up since investigations began. The price of aluminum foil increased 55.2 percent since March 30 2017 and the price of aluminum alloy sheet increased 9.5 percent since Nov. 28.
Vazquez said the 4 percent statistic should not imply that the tariffs had no inflationary effect on primary aluminum, but rather indicates that the prices of primary aluminum are not good enough yet for unused U.S. aluminum smelters to start up again. One of the goals of the tariffs is to increase domestic aluminum production. The Commerce Department found that six aluminum smelters in the U.S. have shut down since 2012 and only five remain. Domestic aluminum production in 2016 was less than half of what it was in 2013.
The effect of the tariff is also mitigated somewhat because Canada, the leading source of primary aluminum imports, is exempt. China, the second largest source, is not exempt. The U.S. imports just over half of its aluminum supply and about 90 percent of its primary aluminum.
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