Economic Policy Institute Study Confirms Section 232 Tariffs on Aluminum Imports Worked

By Lauren Ban
May 26 2021 |
Section 232 trade action helped stabilize the aluminum industry without creating adverse effects for aluminum-consuming companies that make products like canned beverages. Getty Images

The new report mirrors similar findings that examined 232’s positive impact in the steel industry.

Section 232 tariffs on aluminum imports have had an overwhelmingly positive impact on the American economy, leading to billions of dollars in investments that supported the creation of more than 4,500 U.S. jobs in the aluminum industry, a new report released on Wednesday reveals.  

Conducted by the Economic Policy Institute (EPI), the report finds that “import measures imposed in 2018 under Section 232 of the Trade Expansion Act of 1962 enabled U.S. aluminum output, employment, and capital investment to rebound, while creating no adverse effects for aluminum-consuming industries such as motor vehicle parts, construction goods, and canned beverages.” 

The findings mirror a report released in March 2021 that found that Section 232 trade action also stopped the surge of steel imports without negatively impacting the cost of consumer products such as motor vehicles and household appliances. About 3,200 direct jobs have been created in the steel industry since Section 232 steel tariffs went into effect. 

Report authors Adam S. Hersh and Robert E. Scott joined with United Steelworkers President Tom Conway and Jesse Gary of the American Primary Aluminum Association for a press event on Wednesday to unveil the findings of the most recent report, and elaborate on how Section 232 has impacted the metals industry since its implementation in 2018.  

“As the EPI’s report clearly demonstrates, Section 232 measures provided much-needed relief,” Conway said. “As we look to preserve our fragile economic recovery, it’s essential that we maintain the tariffs so that domestic producers can continue to invest in expanding their facilities and adding jobs.” 

Along with creating thousands of new jobs, $6.4 billion has been committed to new investments in the aluminum industry since the initiation of the 232 tariffs. In steel, $15.7 billion in investments are going toward new or upgraded steel facilities, and the $5.9 billion invested in industry restructuring, increasing efficiency and creating jobs. 

And while critics of Section 232 warned that the tariffs would lead to job losses, the data shows just the opposite. Since 2018 (but before the pandemic struck), the manufacturing sector added more than 200,000 new jobs, while the service sector gained more than 4 million new jobs. 

And the aluminum industry itself has seen job gains. 

“We’ve seen continued growth in the downstream portion of our industry,” Gary said. “And, importantly, growth in the primary portion of our industry for the first time in a long time in this country. It has really reversed decades of losses.” 

The event also touched on the personal aspect of Section 232’s impact. James Powell, a casthouse manager at Century Aluminum Company’s Hawesville smelter, explained how Section 232 has not only benefited the smelter that he works at, but his community at-large.   

“In 2016, 2017, when the aluminum prices started to collapse, the industry was starting to pretty much disappear. We started to lay off here at the plant. We weren’t sure where it was going to end,” Powell recalled. “We knew other facilities were going down, we were fearful the same thing was going to happen here. When the 232 program was announced, it gave myself and my coworkers new hope that our smelter might survive. It helped breathe new life into the smelter, our families, and the community.” 

Section 232 has provided American metal workers, like Powell, with some sense of job security. These good-paying, manufacturing jobs contribute toward President Biden’s vision of a thriving American middle class. By keeping Section 232 tariffs in place, the Biden administration can ensure that these jobs are protected from foreign competition.  

Prior to the implementation of Section 232, American metal industries struggled to compete with foreign manufacturers. Countries such as China, Brazil, and India, among others, contributed toward global overcapacity through government subsidies and other unfair trade practices. That led to a flood of below-cost imports, forcing the closure of dozens of factories and leading to thousands of layoffs.  

All of this posed a serious risk to U.S. national and economic security.  

“The subsidies that have driven overcapacity around the globe have gone on for decades,” Gary said. “And we have seen the destruction of American jobs and American smelters for decades now. And this program, frankly, has been the only thing that has turned that around. And it has done so relatively quickly.” 

In 2018, ahead of Section 232’s implementation, there was some concern that such measures would lead to rising costs. Now, with the release of EPI’s report, proponents of Section 232 can safely say that is not true.  

As Hersh explained, “There is no statistical evidence that the import measures produce harm for consumers or for industries who are reliant on aluminum inputs.” 

And yet, there are still those that advocate for the repeal of Section 232.  

“There is no need to lift this. Go slow,” Conway said, adding that Section 232 should remain in place “until we’re at a capacity in the U.S. where we’re confident and sufficient — that we can make our own aluminum and meet our own needs and not be reliant on other nations.”  

Speakers at the EPI event agreed with Conway’s assertion, and noted that more lasting, structural reform is needed to remedy the global overcapacity problem once and for all.  

“This is a global problem. And ultimately, it needs a multilateral solution,” Hersh said.  

It will fall to the Biden administration to address these issues. That effort is likely to begin when the United States meets with European Union officials in the coming months to discuss ways to address industrial overcapacity. But until permanent, enforceable solutions are put into place, Biden must maintain Section 232. 

After all, we cannot rebuild America without the metals industry.  

“President Biden talks about rebuilding the American backbone — in my community, the aluminum smelter is the backbone,” Powell said.  “So, as we build back better, we need to strengthen the backbone and create more good paying jobs.”