The world media has been awash with the news that President Trump has ordered an investigation into whether there is a national security threat angle in the USA’s imports of aluminum. Several counties are caught in this investigation, but the main target is China.
Known as the 232 investigation, Trump’s action on aluminum follows a very similar investigation into steel. The USA already has a complaint lodged with the WTO against China, but Secretary of Commerce Wilbur Ross says it is likely that the WTO action will be “subsumed” into the 232 investigation.
The National Security argument says that in times of war, the USA may not be able to get hold of sufficient quantities of high-purity metal for applications such as the F-35 fighter. In times of war, no country wants to be dependent on another country for vital supplies.
But therein lies a problem. According to our information, there are only a small number of smelters in China that make military grade aluminum. And none of them are anywhere near a shipping point. Chalco is the main supplier to China’s military, using metal from its Baotou Inner Mongolia smelter and Southwest Aluminum.. Zhonghe smelter also produces military grade metal.
The fact is, China is actually a net importer of high purity aluminum. Really, it is quite embarrassing for China – the world’s largest producer of aluminum cannot make enough of these grades of metal for itself, much less to sell to anyone else.
Still, once an investigation is launched, there is no telling how the terms of reference might be amended or broadened. But on the face of it, and to the extent of the information published so far, this appears to be the wrong fight for Mr Trump, if he is really interested in supporting the American aluminum industry.