US launches anti-dumping case against Chinese aluminum producers using rare aggressive tactic

Key Points
  • Secretary Ross issues 'self-initiate' antidumping and countervailing duty cases against China in aluminum.
  • Investigations cover imports of common alloy aluminum sheet from China.
  • The last self-initiated antidumping duty investigation occurred in 1985 against semiconductors from Japan.
Commerce Secretary Wilbur Ross arrives at a state dinner at the Great Hall of the People in Beijing, China, November 9, 2017.
Thomas Peter | Reuters

Commerce Secretary Wilbur Ross has used the powers of his department for the first time in 20 years to self-initiate antidumping duty and countervailing duty cases against the People's Republic of China.

The investigations launched Tuesday cover more than $600 million worth of imports of common alloy aluminum sheet from China. Commerce officials explained to CNBC the investigations were self-initiated under the authority granted to the secretary under the Tariff Act of 1930.

Ross told CNBC these cases are based on the promise President Donald Trump made to American businesses, workers and farmers. "President Trump said he would vigorously enforce our trade laws and be more enforcement-minded than our predecessors. Today's action shows that we intend to make good on that promise to the American people."

According to Ross, there is available evidence that indicates Chinese producers are selling aluminum sheet in the U.S. at prices that are less than fair value and that the Chinese government is providing unfair subsidies to producers of aluminum sheet. "We have available evidence that also indicates U.S. producers of aluminum sheet are suffering injury caused by these imports," stressed Ross.

The secretary told CNBC these cases are not part of the pending Section 232 investigation into aluminum. Self-initiate cases put the government in between the country in question and the industry, shielding the companies from any feared retaliation.

The last self-initiated anti-dumping duty investigation occurred in 1985 on semiconductors from Japan, according to the department.

"Imports of aluminum sheet from China into the United States have been significant since 2005 and have increased rapidly over the last three years," said Ross. "In light of the systemic and significant over-capacity in the Chinese aluminum industry, U.S. producers face the potential for further increases in imports of aluminum sheet from China. We seek trade relationships that are free, fair, and reciprocal — simple principles all should support."

During his confirmation hearing in January, Ross told senators he considered himself "an activist" for U.S. industries and would be willing to provide "people power" to enable the department to self-initiate anti-dumping and countervailing duty cases, "By picking strategic cases and initiating them, it will send a message to the people on the other side that we are getting more serious about this," he said.

According to the International Aluminum Institute, Chinese demand for aluminum is more than half of the global demand with an estimated 60 million tonnes this year. This announcement comes just two weeks after Ross and Trump visited China as part of the president's tour of Asia.

Next Steps:

Senior officials tell CNBC, while the Commerce Department investigates, the ITC will conduct its own investigations, determining if the imports have hurt the U.S. aluminum industry and workforce. The ITC's preliminary determinations are expected on or before Jan. 16, 2018. If the ITC determines there is injury or threat of injury, the Commerce Department investigations can continue. A preliminary countervailing duty determination is scheduled for February 2018 and a preliminary anti-dumping determination is scheduled for April 2018. Those deadlines can be extended.

If the Commerce Department find dumping or unfair subsidization has happened, it will instruct U.S. Customs and Border Protection to start collecting cash deposits from all U.S. companies importing the subject aluminum sheet from China.

Final determinations by the Commerce Department are scheduled for April 2018 for the countervailing duty investigation, and July 2018 for the anti-dumping investigation. Those dates can be extended as well.