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Study Shows US Beverage Firms Paid $250M Extra In 2018 Due To Aluminum Tariffs

Study Shows US Beverage Firms Paid $250M Extra In 2018 Due To Aluminum Tariffs
A country wide trade association that represents the U.S. brewing industry has recently unveiled a study that shows that the import tariffs that were put on aluminum by the United States President Donald Trump under Section 232 has resulted in the U.S. beverage industry making additional payments of about $250 million for aluminum cansheet between March and December last year.
Since the since the 232 tariffs on aluminum was imposed a year ago, additional payments are being made by brewers for cansheet, said the trade body - the Beer Institute. The industry body cited a study that was conducted by Harbor Aluminum which is a research company that specializes in the aluminum industry.
According to the study, only about 50 million dollars out of the 250 million dollars was collected in additional taxes by the U.S. Treasury Department and the rest of the amount was gobbled up by American rolling mills and smelters.
The Beer Institute said that about 70 per cent of the cancheets in the US is accounted for by domestic aluminum scrap which is recycled metals that remains in the country and which does not fall in the additional tariff regulations. But a tariff for all of the aluminum cansheet was paid by the U.S. beverage industry as if the cansheets were made up entirely of imported aluminium. That meant that the difference in amount, after accounting for the additional tariffs, was being gobbled up by rolling mills and smelters as they overcharged the end consumers by the route of tariff-paid price.
"I have heard from brewers large and small from across the country who are seeing their aluminum costs drastically increase, even when they are using American aluminum," said Jim McGreevy, president and CEO of the Beer Institute.
Citing Section 232 of the Trade Expansion Act of 1962, additional tariffs of 25 per cent on steel and 10-percent tariff on aluminium was imposed by the Trump administration in March 2018. The Section 232 allows the US government to use threat to national security grounds to impose tariffs on imported products.
The move was criticised by most of the traditional trade partners of the US including Canada, Mexico and the European Union as well as by business groups. In fact the trading partners even retaliated with tariffs on US goods of their won to protest the Trump tariffs.
The Section 232 clause has been seldom used in the history of the United States for imposition of additional tariffs but the Trump administration has repeatedly invoked that very section. A Section 232 report on imported cars and parts was concluded by the U.S. Commerce Department in February. The same section was used in July last year to test the importing of uranium into the US and a probe was most recently initiated earlier this month by the department over the importing of titanium sponge.

Christopher J. Mitchell

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