March 5, 2018 / 10:54 AM / 13 days ago

Japan aluminum industry wants U.S. to scrap plan on tariffs

TOKYO (Reuters) - Japan’s aluminum industry wants the United States to scrap plans to impose tariffs on the metal since it would hurt business and raise volatility in the metal markets, causing increased uncertainty for future trade.

U.S. President Donald Trump said last week that he would impose a 25 percent tariff on imported steel and a 10 percent levy on imported aluminum to protect U.S. producers, risking retaliation from major trade partners like China, Europe and neighboring Canada.

“We want Trump to abandon the plan,” Yoshihisa Tabata, executive director of the Japan Aluminium Association told Reuters on Monday by phone.

“The U.S. is the second-biggest exporting market after China for Japanese aluminum producers and the high duties will directly impact on their business,” he said.

Japan, which produced 2.07 million tonnes of rolled and extruded aluminum in 2017, exported about 27,000 tonnes to the U.S. out of total exports of about 243,000 tonnes.

“If the new tariffs were slapped, low-end commodities among Japanese aluminum products will be quickly replaced by U.S.-made products although high-end aluminum may take a while to be switched,” he said.

The tariffs are expected to cause higher volatility in metal prices and in the premiums that are paid by buyers on top of exchange prices to cover insurance and the cost of delivery, he said.

“Producers and buyers will have to face unexpected changes in aluminum prices and premiums going forward,” he said.

The Aluminium Association had previously expressed concerns about potential U.S. tariffs, with Mitsuru Okada, the head of the association, saying last July that any U.S. trade action to curb imports may result in surplus supply elsewhere and prompt a chain-reaction of retaliation by other nations.

Tabata echoed those concerns again on Monday.

“If the U.S. tariffs prompt retaliation from other countries and triggers a trade war, aluminum output will eventually shrink as producers will be making products only to meet local demand,” Tabata said.

“That would be a nightmare.”

Reporting by Yuka Obayashi; Editing by Christian Schmollinger

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