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Global Trade is Tough – Aluminum Proves It

By Bill Yeargin

In November the U.S. Department of Commerce announced a historic self-initiated investigation into whether China is selling certain aluminum product into the United States at below fair market value.

What made this action historic was that the Department has not self-initiated an investigation in over 25 years. Normally, the catalyst for an investigation is a complaint by an impacted U.S. industry.

The aluminum industry naturally applauded the U.S. Department of Commerce’s action, stating that it has been operating in a very challenging environment for many years.

I previously served as co-chair of the Trade, Tax Policy and Export Growth Committee as part of a council that advised the U.S. Secretary of Commerce, so I fully understand the impact of the inexpensive imported product on the U.S. aluminum industry.

I also appreciate their concern and related happiness with the Department’s action. Everyone wants free trade to also be fair trade.

However, it is also important that we consider the unintended consequences. The U.S. Department of Commerce’s own initial projections show that the significant import duties on Chinese aluminum, likely to result from this investigation, will increase prices of the impacted aluminum in the U.S. by over 56 percent.

That price increase is not paid by the importer of the aluminum, it is paid by U.S. manufacturers and consumers.

The boating industry will be hit particularly hard by this price increase. Aluminum boats made up 43 percent of the U.S. boat sales last year (111,000 units) and there were 205,000 aluminum trailers built.

The price increase that would result from the additional import duties could potentially impact 22,000 marine industry jobs and many more in the trailer and RV industries.

And, ironically, the domestic aluminum sheet makers claim just 3,700 workers. And more ironically, the aluminum the U.S. boating industry needs (sheets 72 inches and wider) is not widely available through U.S. mills.

Fortunately for the marine industry, the National Marine Manufacturers Association is working hard to bring awareness to how the additional import duties would impact our industry by raising prices of our products and disrupting supply to boat buyers.

At our company, we understand the complexities of global trade. Though uniquely American made with almost entirely U.S. materials, we still need a global supply chain to build the world’s best boats.

Additionally, we distribute into nearly 70 countries and have many great relationships around the world. We have become a globally interconnected world and these issues will continue to surface.

There is no question that these are tough decisions and as we look at these issues it is easy to be captured by the emotional rhetoric.

However, I hope that as a country we will make wise decisions based on a full understanding of all the facts and consideration of the impact on all the affected parties. Our future depends on it.

Bill Yeargin is the president and CEO of Correct Craft.

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