Century Aluminum’s Mike Bless has been asking the federal government for months to take action against what he terms illegal dumping of cheap, Chinese-made aluminum on the U.S. market.
Bless, president and CEO of the company that owns the Mount Holly smelter in Goose Creek, soon might get his wish.
President Barack Obama on Wednesday signed the Trade Facilitation and Trade Enforcement Act, an overhaul of U.S. customs laws aiming to combat unfair trade practices. The law lets the government respond more quickly to foreign companies that circumvent tariffs and anti-dumping laws.
“Once we set up trade rules, people should have to abide by them,” Obama said during a bill-signing ceremony at the White House. “We can’t have other countries cheating. We can’t have other countries engaged in practices that disadvantage American workers and American businesses.”
The new law is part of a growing national backlash, fueled by presidential election rhetoric, against China over a number of issues including trade, cyber attacks and human rights violations, according to a report by the IBISWorld research group.
“While the (law) applies broadly to all countries that trade with the United States, its chief target is China,” the IBISWorld report states. “The country’s low wages and lax regulations have provided a steady stream of low-cost imports for American consumers. However, they have undercut U.S. manufacturers and forced layoffs to the tune of 2.4 million manufacturing jobs since permanent normal trade relations were established with China in 2000.”
The Mount Holly smelter has felt the pinch. Its capacity — and 600-employee workforce — was cut in half at the end of last year because high electricity costs have made it impossible to compete with aluminum coming from China, Bless has said. He also has said the plant faces a total shutdown this spring if state legislators can’t find a way to let Century Aluminum buy its power on the open market.
“We’re seeing supply growth well in excess of demand growth in China and that, of course, has produced an industry in a severe state of overcapacity,” Bless said during a conference call with stock analysts this month. “We’ve come to the conclusion this behavior simply won’t stop until and unless it’s forced to do so.”
The overproduction has taken a toll on Century Aluminum’s finances. For 2015, the company reported a net loss of $43.1 million during the fourth quarter and an annual loss of $59.3 million. That compares with net income of $75.8 million for the fourth quarter a year earlier and net income of $126.5 million for all of 2014.
Bless said he has spent a lot of time talking with members of Congress and the Obama administration about aluminum dumping from China and that progress is being made.
“We’ll not back down on these efforts,” he said. “The illegal behavior is simply too obvious and it goes without saying the evidence exists that it is causing material harm to our industry, both in the U.S. and in the rest of the world.”
China is America’s largest trading partner, accounting for about $480 billion — or 22 percent — of U.S. imports and $116 billion — or 8 percent — of U.S. exports, according to the U.S. Census Bureau. More than half of the imports consist of low-cost raw materials that domestic manufacturers use to produce their final products.
China is a hot topic on the campaign trail. Republican front-runner Donald Trump has proposed a 45 percent tariff on all Chinese exports to the U.S., but such action likely would have a ripple effect on consumers.
“Were the next president and Congress to take a more protectionist approach with China, it would raise production costs for U.S. companies, which would ultimately be passed down to buyers in the form of higher prices,” the IBISWorld report states, adding that presidential candidates are “eager to tap into the frustrations of American workers who feel left behind by globalization and free trade.”
This week’s new law will not significantly affect the price and availability of Chinese imports. Instead, it will result in tougher penalties for foreign businesses that violate existing trade laws. It gives government agencies more personnel and resources to investigate trade schemes, such as shipping products through a third country or misclassifying the true origin of imports. And it creates a new process with strict deadlines for Customs and Border Protection to investigate complaints.
“It makes sure these other countries are playing by the rules,” Obama said.
To Bless, it’s a step in the right direction and a sign that the federal government is ready to address the industry’s concerns.
“There is definitely headway,” Bless said during the conference call. “We’ve got everybody’s firm attention. The case has been made. ... And now we have to wait and see sort of what comes next, and we think over the next couple of months that will be known. ... We do expect some real developments in the trade process during the next couple of months.”
Reach David Wren at 843-937-5550 or on Twitter at @David_Wren_