Trade Group: New Aluminum Tariffs Undermine U.S. Companies and Consumers

Trade Group: New Aluminum Tariffs Undermine U.S. Companies and Consumers
Digital Exclusive

The November 20, 2023, decision by the U.S. Department of Commerce (DOC) to extend tariffs on aluminum to South Korea and Thailand will cost jobs in the United States, while increasing prices for consumers and undermining the integrity of flexible packaging intended to protect food and medical supplies, according to the Flexible Packaging Association (FPA).

“Despite numerous attempts to convey the gravity of the situation, whether it be jobs, scarcity of products, and rising costs to everyday consumers in terms of staples, as well as healthcare and support of military needs, DOC blatantly disregarded the data and evidence,” according to a statement from FPA, a trade group based in Annapolis, Maryland, that has been lobbying against the tariffs since the Trump administration first proposed them. “This will only further drive converting jobs offshore, leading to increased supply chain disruptions for food, as well as medical supplies, and raising prices for all of these goods.”

Liz Roberts, principal and co-founder of Capitoline Consulting LLC, which represents FPA on Capitol Hill, says FPA maintains that DOC wrongly concluded that aluminum foil producers in South Korea and Thailand were circumventing antidumping orders on aluminum foil from China.

“FPA believed that DOC picked winners and losers in U.S. manufacturing markets, and aluminum manufacturers won over flexible packaging manufacturers because the department refused to appreciate and distinguish among aluminum, aluminum foil, and the various gauges of aluminum foil that are manufactured and used by the flexible packaging industry,” Roberts says.

Added Burden

In its statement, FPA points out that no one asked DOC to investigate. DOC self-initiated the case against suppliers of aluminum foil from South Korea and Thailand.

“The determination adds a burden on the use of necessary aluminum foil for food, pharmaceuticals, and medical device packaging for American manufacturers of flexible packaging, without any commensurate benefit to domestic aluminum foil producers,” according to FPA. “This is because—but for one of these domestic producers—they do not manufacture the light gauge foil that is necessary for packaging applications.”

That makes the duties inappropriate because the material cannot be sourced domestically, forcing packaging manufacturers to import it, the organization says.

FPA also maintains that DOC didn’t try to craft a solution when solutions were available.

“DOC ignored their statutory obligations and took the easy way out—lumping all foil together and dismissing the obvious fact that the reason there were no arguments for the other gauges of foil is that domestic production actually exists, unlike thin gauge packaging foil,” according to FPA.

Seeking Alternatives

Alison Keane, FPA president and CEO, says flexible packaging companies have been trying to find alternatives to aluminum foil; however, alternatives are slow to be adopted and may not be scalable.

“Converters and their product manufacturer clients are all looking for alternative barrier solutions that will provide the same moisture, odor, bacteria, and sunlight protection,” she says. “Some exist, but they cannot be used for every application and may decrease the shelf life or stability of the product.”

And, she adds, “there are costs associated with these alternatives, and these are the trade-offs that brand owners have to make when choosing one packaging type over another in trying to meet their sustainability goals.”

Legislative Relief Sought

John Hewitt, vice president, packaging and sustainability for the Consumer Brands Association, says, “Aluminum is one of the most ubiquitous packaging materials” and remains important to the consumer packaged goods (CPG) industry.

“Whether it’s for beverage or aerosol cans or super thin packaging material that ensures the freshness and portability of popular snacks on the go, the CPG industry needs a reliable and transparent aluminum market,” Hewitt says. “So, we are watching legislation that could address opacity in pricing and the application of tariffs.

“Downstream CPG users need to know they’ll have continued access to essential packaging supplies,” he adds.

Roberts says FPA supports legislation that would address some of the issues: House Resolution (H.R.) 2698/Senate (S.) 2462—Aluminum Pricing Examination Act; and H.R. 3739/S. 2343—Fair Tariff Act.

“FPA supports fair trade policies and the elimination of duties and tariffs on packaging grade aluminum foil—unless and until it is manufactured in the quantity and quality necessary to support the domestic flexible packaging industry,” Roberts adds. “FPA encourages Congress to exercise its oversight responsibilities over the executive power to implement duties and tariffs and provide relief to the flexible packaging industry.”