It would seem that Alcoa would be in a good position to reap the benefits of the aluminum tariffs put in place by President Donald Trump. The U.S. based aluminum producer founded 130 years ago has faced stiff competition the last few years from companies overseas.
However, Alcoa asked the White House administration on Monday for an exemption on the tariffs of 10%. Alcoa stated the reason was the company imports a large amount of aluminum from facilities it has in Canada, which, is one of the countries that is subject to the metal tariffs the White House has imposed.
The tariffs were imposed by the Commerce Department on aluminum and steel earlier in 2018, saying that the imports of metals was degrading the country’s industrial base and was threatening the country’s national security.
That move was set up to help U.S. metal manufacturers such as Century Aluminum and U.S. Steel. However the request by Alcoa for an exemption, underlines the risk the White House faces as it attempts to protect U.S. companies by building trade barriers, as the trade tariffs are help to some, but have potential to hurt many others.
Businesses relying on foreign materials face increased costs, and other that depend on overseas market access have been hit with other countries retaliatory tariffs such as in Mexico, Canada and the European Union.
Last month Alcoa said aluminum tariffs likely would add as much as $100 million in 2018 to its costs, which in turn contributed to a steep drop in share price.
Other large companies including Whirlpool, Caterpillar and Harley-Davidson have recently detailed the additional costs their businesses have due to the tariffs placed by the Trump administration.
In July, Coca-Cola said it had to increase its prices for some products to reflect the higher costs for metals, and the hits financially from the tariffs could grow in the upcoming months.
The White House has threatened to impose more tariffs on cars and car parts as well as threatening to impose more tariffs on over $200 billion in imports from China.
After the tariffs on aluminum were proposed, Alcoa requested that Canada and several other countries be exempted. In the exemption request, Alcoa explained that it imports aluminum from operations it has in Canada to be further produced at its Warrick, Indiana facility near Evansville that has 1,600 employees.
Alcoa says it is not able to get the aluminum that it needs in large enough quantities from its facilities in the U.S. or from other producers of aluminum in the U.S.