One and a half years ago, the U.S. primary aluminum industry was hanging on by a thread. Between 2010 and 2017, 18 of 23 domestic aluminum smelters shut down, eliminating roughly 13,000 good domestic jobs. In 2016, there were three alumina refineries supplying U.S. smelters; by 2017, only one remained in operation. In 2017 the Commerce Department launched Section 232 investigations to determine whether aluminum (and steel) imports were a threat to national security.

This report demonstrates that after the Section 232 tariffs were imposed on aluminum (and steel) on March 8, 2018, the domestic producers of both primary aluminum and downstream aluminum products have made commitments to create thousands of jobs, invest billions of dollars in aluminum production, and substantially increase domestic production. Specifically:

U.S. primary aluminum production is projected to increase by 67 percent (500,000 tons per year) between 2017 and the end of 2018. Three smelters are being restarted, and another has announced a capacity expansion. Seven smelters in total will be in operation by the end of 2018. These restart and expansion projects will create over 1,000 new jobs and generate over $100 million in new investment.

Since Section 232 tariffs were imposed, 22 new and expansion projects have been announced in downstream aluminum industries producing extruded (rod and bar, pipe and tube, and extruded shapes) and rolled (sheet and plate) products. These new and expanded facilities will employ over 2,000 additional workers, generate $3.3 billion in new investments, and add nearly 1,000,000 tons of annual rolling and extrusion capacity to the downstream, domestic aluminum industry.

In the year-to-date period of January through October 2018 (compared with the same period in 2017), shipments of all extruded products are up 6.3 percent (279.8 million pounds), and total sheet and plate shipments have increased by 4.6 percent (336.4 million pounds). Those figures are for total North American shipments (including the United States and Canada). Industrial production data show that these trends are even stronger in the United States.

The Federal Reserve’s industrial production data provide estimates of real output, based on measures of physical output, or (where output data are not available), total production-worker hours, by industry. U.S. output of raw alumina and refined & processed aluminum increased 9.8 percent between February 2018 (before tariffs were imposed) and October 2018 (data are for the four-digit North American Industry Classification—NAICS—code 3313). Output of rolled and extruded aluminum products increased 9.1 percent from February to September 2018. Therefore, domestic (U.S.) producers appeared to outperform continental production for the U.S. and Canada, referred to above.

To date (February through October 2018), U.S. employment in the aluminum industries (primary and downstream) has increased slightly (by 300 jobs) since the tariffs were imposed. Aluminum production is highly capital-intensive, and restarting closed facilities is a costly and time-consuming process. Planned restarts and capacity expansions in both primary aluminum and downstream rolling and extruding mills will create more than 3,000 jobs, as shown below.

When the tariffs on steel and aluminum imports were imposed, critics claimed that while they would save thousands of jobs in primary metals industries, hundreds of thousands of jobs would be eliminated in the rest of the economy. These critics referenced a 2018 study by the Trade Partnership. I said at the time that the Trade Partnership forecast was wildly exaggerated and that the impacts of the tariffs would be quite minor. This report demonstrates that, to date, there is no evidence of the negative downstream effects claimed in the Trade Partnership study to be found anywhere in the U.S. economy. In total, the U.S. manufacturing sector has added approximately 176,000 jobs (including 2,700 in iron and steel production) since February 2018, the month before the tariffs took effect. In the rest of the economy, approximately 1.4 million jobs have been created in this same period. Looking more specifically at the industries aluminum producers supply, there remains no evidence that the imposition of tariffs on aluminum (or steel) have had the kinds of negative employment impacts—in downstream manufacturing or other parts of the economy—that were predicted by critics of aluminum tariffs.

Background

In the spring of 2017, when the U.S. Department of Commerce and the president were considering action in a Section 232 National Security Investigation into the threats posed by steel and aluminum imports, the entire domestic aluminum industry was hanging on by a thread. The threat was, and continues to be, principally driven by the growth of excess capacity and overproduction in China and elsewhere. Chinese primary aluminum production capacity increased nearly 1,500 percent from 2000 to 2017, and China is responsible for 82 percent of the total increase in global aluminum production capacity between 2000 and 2017. This growth has been fueled by massive Chinese government subsidies and other market-distorting practices. As the Chinese expansion exploded, primary aluminum production in other regions, such as India and the Persian Gulf States, also increased through similar types of subsidization at a time when smelters in the United States were being idled.

The continued expansion and maintenance of excess capacity both inside and outside of China has suppressed global aluminum prices, transmitting injury directly to domestic aluminum producers in the United States. Aluminum is a global commodity, and prices are primarily driven by total global supply and demand, regardless of where the aluminum is produced, sold, or stored. The U.S. aluminum market effectively imports the adverse price and volume effects of China and others’ excess capacity and production via changes in London Metal Exchange (LME) prices.

Collapsing prices have decimated U.S. primary aluminum production, capacity, and employment. The LME market price of aluminum fell 39 percent between 2007 and 2016. In an industry with high fixed costs, most domestic producers have not survived this prolonged, steady price collapse. Between 2000 and 2017, 18 of 23 domestic smelters shut down and more than 13,000 good domestic production jobs disappeared.

Today, after the imposition of tariffs of only 10 percent, domestic production in both the primary aluminum (including both alumina refining and secondary smelting and alloying of aluminum) and downstream aluminum rolling and extruding industries is up; these producers are hiring and expanding, adding capacity, making large investments, and increasing production, as is shown in this report.

These outcomes belie claims by critics, including widely quoted economists from the Trade Partnership firm, along with a wide array of pundits, journalists, and representatives of many firms in downstream industries, who argued that the Section 232 tariffs would have a devastating negative impact on wide range of domestic industries. For example, according to Bloomberg, Ford Motor Co. “began the year by warning that rising costs for raw materials like steel and aluminum, coupled with unfavorable exchange rates, would add $1.6 billion to its costs this year. Of course, increases in the real value of the dollar, which has gained 5.4 percent this year, raise the cost of everything that domestic automobile manufacturers import from the rest of the world (including finished vehicles and parts), and changes in the cost of metals is a tiny fraction of their overall costs. Nonetheless, data reviewed here demonstrate that the steel and aluminum tariffs have had no significant, industry-specific or economywide negative impacts on employment or output in U.S. manufacturing or other domestic industries.

Positive impacts of the aluminum tariffs on the aluminum industries

U.S. primary aluminum production will increase by 67 percent (500,000 tons per year) between 2017 and the end of 2018. Research conducted for this report reveals that three smelters are being restarted and another has announced a capacity expansion. Seven smelters in total will be in operation by the end of 2018. These restart and expansion projects will create over 1,000 new jobs and generate over $100 million in new investment, as shown below.

Table 1 summarizes the specific data on the four significant U.S. projects (the one expansion and three restarts of aluminum smelting and casting operations). It shows that these investments will increase domestic capacity by 663,000 tons, at a cost of at least $137 million, and they will ultimately create at least 1,075 new jobs.

Table 1 U.S. aluminum restarts and expansions since 232 implementation Primary aluminum production Company Description Additional capacity Investment Jobs created Metric tons (MT) (Millions of dollars) 1. Century Aluminum Sebree, Ky., casthouse expansion 90,000 $7 50 2. Century Aluminum Hawesville, Ky., smelter restart 150,000 $100 300 3. Magnitude 7 Metals New Madrid, Mo., smelter restart 263,000 450 4. Alcoa Warrick, Ind., smelter restart 160,000 $30 275 Subtotal 663,000 $137 1,075 Downstream production Company Description Additional capacity Investment Jobs created Metric tons (MT) (Millions of dollars) 1. Ellwood Group Ellwood City, Pa., greenfield secondary billet casthouse 70,000 $60 34 2. Benada Aluminum Sanford, Fla., extrusion press 35 3. Hydro Hydro, Schuylkill County, Pa., extrusion press $100 60 4. JW Aluminum Russellville, Ark., St. Louis, Mo., and Williamsport, Pa., foil processing investment $33 5. Braidy Industries Ashland, Ky., sheet and plate rolling mill $1,500 600 6. Novelis Guthrie, Ky., greenfield rolling mill 200,000 $300 125 7. Granges Newport, Ark., rolling mill restart 20,000 $26 100 8. JW Aluminum Goose Creek, S.C., rolling mill expansion 80,000 $225 50 9. Matalco Multiple locations: greenfield billet and slab secondary casthouses 340,000 10. Arconic Nash, Texas, rolling mill restart $14 285 11. Granco Clark Belding, Mich., extrusion expansion 15 12. Pennex Aluminum Leetonia, Ohio, brownfield extrusion expansion 45 13. Gateway Extrusions Union, Mo., extrusion plant expansion $15 14. Elixir Extrusions Douglas-Coffee County, Ga., extrusion press $8 130 15. Granges Hundington, Tenn., rolling mill expansion $110 100 16. Aleris Lewisport, Ky., expanded rolling mill $400 17. Logan Aluminum Logan Country, Ky., brownfield rolling mill expansion 270,000 $408 250 18. Service Center Metals Prince George, Va., extrusion plant expansion $45 58 19. Superior Extrusion Marquette, Mich., extrusion press $11 30 20. Bonnell Aluminum Niles, Mich., extrusion press $18 21. Mid-states Aluminum Fond du Lac, Wis., extrusion press $20 37 22. Magnode Trenton, Ohio, extrusion press $13 50 Subtotal 980,000 $3,305 2,004 Total (primary and downstream aluminum) 1,643,000 $3,442 3,079 Source: See table notes at end of report. Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Downstream aluminum rolling mills and extrusion operations in the United States (products not benefiting from tariffs) have nonetheless continued to prosper in the wake of the imposition of primary aluminum tariffs, as shown by continued expansion, investment, and hiring plans in the downstream sector. Table 1 lists 22 separate announcements of new and expanded aluminum rolling mill and extrusion operations. These 22 projects will create 2,000 new jobs, with a capital investment of $3.3 billion. They will increase downstream capacity of these plants by at least 980,000 tons on an annual basis.

Figure A demonstrates why U.S. primary and downstream producers are restarting or expanding operations. It shows that demand is growing for both primary and refined aluminum produced in the United States and Canada. Shipments of aluminum extruded products increased by 279.8 million pounds (6.3 percent) year-to-date in 2018 (comparing shipments between January and October 2018 relative to the same period in 2017). Shipments in all segments in this market increased significantly in 2018, including rods and bars, up 62.9 million pounds (15.3 percent); pipes and tubes, up 17.9 million pounds (5.0 percent); and other extruded products, up 199.1 million pounds (5.4 percent).

Figure A Growth in U.S. and Canadian shipments of aluminum extruded products, year-to-date (October 2018) Change (million pounds) Total 279.8 Rod and bar 62.9 Pipe and tube 17.9 Extruded shapes 199.1 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Note: Data compare shipments between January and October 2018 with shipments between January and October 2017. Data used are industry data. Source: EPI analysis of the Aluminum Association, “U.S. and Canadian Producer Shipments of Aluminum Extruded Products” (Excel file, available to subscribers), accessed November 20, 2018 Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Figure B shows that shipments also grew strongly in aluminum sheet and plate production year-to-date through October 2018, relative to the same period in 2017. Total sheet production has increased 336.4 million pounds (4.6 percent). Non-heat-treatable sheet increased 166.1 million pounds (4.6 percent) year-to-date through October. All other sheet and plate (including heat-treatable) increased 203.5 million pounds (14.2 percent). The only category of shipments that declined in the entire industry was can stock, which declined 33.3 million pounds (1.0 percent). This segment is discussed further below.

Figure B Growth in U.S. and Canadian shipments of aluminum sheets and plate, year-to-date (October 2018) Association Change, in thousands of pounds Total sheet & plate 336.4 All other sheet 166.1 Can stock -33.3 All other sheet & plate 203.5 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Note: Data compare shipments between January and October 2018 with shipments between January and October 2017. Data used are association data. Source: EPI analysis of the Aluminum Association, “U.S. and Canadian Producer Shipments of Sheet and Plate” (Excel file, available to subscribers), accessed November 20, 2018 Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Figures A and B report trends on shipments of downstream aluminum products from plants throughout North America. More detailed data on U.S.-only industrial production of aluminum and aluminum products is available from the Federal Reserve’s Industrial Production database. Table 2 summarizes data on comparative industrial production estimates for the steel and aluminum industries. The Federal Reserve industrial production data provide estimates of real output, based on measures of physical output, or (where output data are not available) total production-worker hours, by industry.

Table 2 Change in U.S. aluminum and steel production from February to October 2018 (Industrial production index, 2012 = 100) Industry NAICS code 2018 Percent change February October Alumina & aluminum production & processing 3313 103.0 113.0 9.8% Aluminum sheet, plate, other rolling & drawing* 331315, 331318 104.4 113.9 9.1% Nonferrous (except aluminum) production & processing 3314 93.7 89.1 -4.9% Foundries (ferrous and nonferrous) 3315 97.3 104.5 7.4% Iron and steel products** 3311, 3312 95.3 101.8 6.7% * Industrial production data are through September only and includes rolling, drawing, and extruding (NAICS 331315 and 331318). ** Industrial production data are for blast furnaces and iron and steel mill products (NAICS 3311 and 3312). Note: Weights are based on annual estimates of value added. Source: EPI analysis of Board of Governors of the Federal Reserve System, Industrial Production and Capacity Utilization–G.17 Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Overall U.S. production of primary and downstream aluminum products (NAICS 3313) increased 9.8 percent between February and October 2018 (before and after the tariffs took effect). Production of downstream products only (aluminum sheet, plate, and other rolling and drawing and extruded products) increased 9.1 percent in the same period. Overall, domestic (U.S.) producers appeared to outperform continental production for the U.S. and Canada (shown in Figures A and B).

On the other hand, nonferrous production (other than aluminum products) declined 4.9 percent in the same period. (Copper is an example of another nonferrous product.) The decline of this sector, relative to aluminum production, reflects, in part, the beneficial effects of the tariff on the domestic aluminum industry. Foundry production (both ferrous and nonferrous) increased 7.4 percent. Overall iron and steel production, by contrast, increased 6.7 percent in the same period. It is noteworthy that the 232 tariffs in steel (at 25 percent) were much higher than the 10-percent tariffs in aluminum, yet output rose faster in the aluminum sectors.

Beer industry claims

The decline of the can stock sector, shown in Figure B, merits further examination, in part because the beer industry in particular has aggressively promoted claims that the 10-percent aluminum tariff would cost more than 20,000 jobs, despite the fact that the industry’s private consultant report that serves as the source of the claim actually acknowledges that the aluminum used in beverage cans represents only 5.7 percent of the manufacturers’ cost of beer in cans. Aside from the obvious fact that 10 percent of 5.7 percent is equal to less than six-tenths of one percent of production costs—which is immaterial in an industry that can afford to spend tens of billions of dollars annually in advertising on sports and other televised programs—the analysis that produced this estimate ignores several basic economic trends at work in the processed food and beverage industries.

First, sales of can stock have followed a steady declining trend for at least a decade, as shown in Figure C. The figure plots total U.S. and Canadian can stock shipments against a trend line, which follows a clearly negative declining trend. The driving logic behind this trend simply reflects, in part, growing consumer preferences for fresh (and frozen) foods and products over canned products. Aluminum tariffs have no discernable effect on this trend rate of decline after February 2018; in fact, can stock shipments in four of the eight months between March and October lie above the trend shipment rates shown in Figure C.

Figure C U.S. and Canadian can stock shipments, January 2007–October 2018 Producer domestic can stock trendline Jan-2007 371.0 386 Feb-2007 334.0 Mar-2007 371.2 Apr-2007 336.1 May-2007 389.9 Jun-2007 362.9 Jul-2007 399.4 Aug-2007 387.8 Sep-2007 379.2 Oct-2007 406.0 Nov-2007 371.6 Dec-2007 359.3 Jan-2008 404.7 Feb-2008 372.3 Mar-2008 406.5 Apr-2008 404.1 May-2008 409.3 Jun-2008 408.7 Jul-2008 427.5 Aug-2008 386.4 Sep-2008 389.5 Oct-2008 382.5 Nov-2008 326.3 Dec-2008 357.7 Jan-2009 356.3 Feb-2009 343.4 Mar-2009 381.0 Apr-2009 357.7 May-2009 385.8 Jun-2009 392.6 Jul-2009 383.1 Aug-2009 395.1 Sep-2009 376.1 Oct-2009 372.2 Nov-2009 341.8 Dec-2009 355.0 Jan-2010 347.1 Feb-2010 331.4 Mar-2010 360.5 Apr-2010 343.3 May-2010 368.3 Jun-2010 381.2 Jul-2010 383.8 Aug-2010 376.5 Sep-2010 369.9 Oct-2010 366.8 Nov-2010 360.6 Dec-2010 339.1 Jan-2011 364.1 Feb-2011 353.0 Mar-2011 397.0 Apr-2011 369.0 May-2011 393.5 Jun-2011 401.3 Jul-2011 375.2 Aug-2011 389.0 Sep-2011 357.4 Oct-2011 362.8 Nov-2011 333.8 Dec-2011 352.1 Jan-2012 362.7 Feb-2012 352.4 Mar-2012 384.4 Apr-2012 361.4 May-2012 388.0 Jun-2012 387.5 Jul-2012 381.4 Aug-2012 393.2 Sep-2012 372.9 Oct-2012 351.2 Nov-2012 331.4 Dec-2012 331.8 Jan-2013 379.7 Feb-2013 346.2 Mar-2013 388.2 Apr-2013 380.7 May-2013 386.9 Jun-2013 370.2 Jul-2013 391.0 Aug-2013 365.1 Sep-2013 346.7 Oct-2013 365.0 Nov-2013 320.7 Dec-2013 321.6 Jan-2014 349.2 Feb-2014 322.5 Mar-2014 368.8 Apr-2014 342.0 May-2014 367.5 Jun-2014 366.7 Jul-2014 374.5 Aug-2014 370.6 Sep-2014 357.8 Oct-2014 349.4 Nov-2014 332.1 Dec-2014 349.4 Jan-2015 352.9 Feb-2015 317.6 Mar-2015 360.5 Apr-2015 337.0 May-2015 348.1 Jun-2015 361.0 Jul-2015 354.9 Aug-2015 357.1 Sep-2015 354.8 Oct-2015 354.5 Nov-2015 334.4 Dec-2015 345.5 Jan-2016 333.4 Feb-2016 339.4 Mar-2016 366.6 Apr-2016 348.1 May-2016 352.7 Jun-2016 365.8 Jul-2016 350.2 Aug-2016 374.3 Sep-2016 355.1 Oct-2016 310.2 Nov-2016 343.5 Dec-2016 315.1 Jan-2017 346.2 Feb-2017 324.6 Mar-2017 362.8 Apr-2017 322.3 May-2017 348.2 Jun-2017 345.6 Jul-2017 343.8 Aug-2017 356.2 Sep-2017 322.7 Oct-2017 335.4 Nov-2017 316.1 Dec-2017 310.6 Jan-2018 345.8 Feb-2018 305.7 Mar-2018 346.7 Apr-2018 326.4 May-2018 359.3 Jun-2018 336.7 Jul-2018 351.3 Aug-2018 338.5 Sep-2018 314.2 Oct-2018 349.9 337 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Note: Data are association data. Source: EPI analysis of the Aluminum Association, “U.S. and Canadian Producer Shipments of Sheet and Plate” (Excel file, available to subscribers), accessed November 20, 2018 Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

The other factor that is driving market sales in the beer industry is growing demand for craft and imported brews, as shown in the Beverage Information Group’s 2018 Beer Handbook. Furthermore, as shown in Figure D, overall U.S. employment in breweries, wineries and distilleries has increased steadily since the end of the Great Recession in 2009. Although sales of beer have been in decline, production of craft beer, wine, and distilled products is much more labor-intensive than mass production of popular beers, which are an industrial product. Thus, employment in this industry is growing despite the trend decline in consumption of popular beer. Thus, Figure D reflects no evidence of distress or job loss shown as a result of the aluminum tariffs. The structural decline of the popular beer industry is strictly a product of changing tastes and structural change within that industry.

Figure D U.S. breweries, wineries, and distilleries employment, January 2007–September 2018 Employment Jan-2007 71.3 Feb-2007 71.2 Mar-2007 70.8 Apr-2007 71.1 May-2007 72 Jun-2007 72.9 Jul-2007 73.1 Aug-2007 73.4 Sep-2007 72.4 Oct-2007 73.2 Nov-2007 73.9 Dec-2007 73.9 Jan-2008 73.8 Feb-2008 73 Mar-2008 74.2 Apr-2008 74.8 May-2008 75.2 Jun-2008 75 Jul-2008 74.5 Aug-2008 74.2 Sep-2008 74.7 Oct-2008 73.8 Nov-2008 74.3 Dec-2008 75.6 Jan-2009 73.9 Feb-2009 73.2 Mar-2009 73.3 Apr-2009 73.1 May-2009 73.1 Jun-2009 72.7 Jul-2009 72.6 Aug-2009 72.6 Sep-2009 72.1 Oct-2009 72.3 Nov-2009 71.6 Dec-2009 71 Jan-2010 70.3 Feb-2010 71.8 Mar-2010 72.5 Apr-2010 71.7 May-2010 71.6 Jun-2010 71.7 Jul-2010 72.4 Aug-2010 72.6 Sep-2010 73.7 Oct-2010 75.1 Nov-2010 76.7 Dec-2010 75.9 Jan-2011 74.4 Feb-2011 76.4 Mar-2011 76 Apr-2011 77.8 May-2011 78 Jun-2011 79.1 Jul-2011 78.8 Aug-2011 80 Sep-2011 79.3 Oct-2011 79.5 Nov-2011 79.5 Dec-2011 79.7 Jan-2012 80.4 Feb-2012 80.3 Mar-2012 82 Apr-2012 82.2 May-2012 83 Jun-2012 82.9 Jul-2012 83.7 Aug-2012 84.4 Sep-2012 85.6 Oct-2012 86.3 Nov-2012 86.9 Dec-2012 88.4 Jan-2013 89.8 Feb-2013 92 Mar-2013 90.4 Apr-2013 92.3 May-2013 93.8 Jun-2013 94.3 Jul-2013 95.3 Aug-2013 96.1 Sep-2013 97.3 Oct-2013 98.7 Nov-2013 99.1 Dec-2013 98.8 Jan-2014 99.5 Feb-2014 100.2 Mar-2014 101.4 Apr-2014 103 May-2014 103.3 Jun-2014 104.7 Jul-2014 105.3 Aug-2014 106.1 Sep-2014 105.9 Oct-2014 106.8 Nov-2014 107.9 Dec-2014 108.9 Jan-2015 111 Feb-2015 111.8 Mar-2015 114 Apr-2015 115.2 May-2015 116.2 Jun-2015 117.7 Jul-2015 119.3 Aug-2015 122 Sep-2015 122.6 Oct-2015 123.1 Nov-2015 124.2 Dec-2015 127 Jan-2016 127.4 Feb-2016 129.2 Mar-2016 128 Apr-2016 130.5 May-2016 132.2 Jun-2016 133.9 Jul-2016 136.9 Aug-2016 137 Sep-2016 139 Oct-2016 138.4 Nov-2016 139.1 Dec-2016 139.4 Jan-2017 140.6 Feb-2017 142.1 Mar-2017 143.4 Apr-2017 145 May-2017 147 Jun-2017 147.1 Jul-2017 147.8 Aug-2017 148.6 Sep-2017 149.5 Oct-2017 151.3 Nov-2017 152.4 Dec-2017 153.9 Jan-2018 155.5 Feb-2018 156.9 Mar-2018 158.6 Apr-2018 159.7 May-2018 160.9 Jun-2018 161 Jul-2018 161 Aug-2018 162.2 Sep-2018 161.7 Chart Data Download data The data below can be saved or copied directly into Excel. The data underlying the figure. Source: Bureau of Labor Statistics, Current Population Survey, public data series aggregated from basic monthly CPS microdata and accessed through the Labor Force Statistics database and series reports, accessed November 8–December 7, 2018 Share on Facebook Tweet this chart Embed Copy the code below to embed this chart on your website. Download image

Examining the beer industry claims of harm from the aluminum tariffs in more detail, most of the job losses claimed in the industry’s private consultant report were in downstream distribution sectors, with 91 percent of the 20,300 jobs lost in “retailing, supplier and induced” segments. As shown below, there is no evidence of job losses to date in these broader segments of the economy. Much like the aggregate modeling analysis by the Trade Partnership, referenced above, such models bear no relationship to observed impacts of the aluminum tariffs on the domestic economy to date. This report concludes with an examination of these broader claims about the impacts of the steel and aluminum tariffs on the U.S. economy.

Overall impacts of the steel and aluminum tariffs on U.S. employment

Table 3 compares two studies that estimate the likely employment impacts of the steel and aluminum tariffs with the actual performance of the economy between February and October of 2018. The table covers total U.S. employment in 32 detailed and 2 aggregate industries, and overall nonfarm employment in the domestic economy. The Trade Partnership produced two studies of the effects of the steel and aluminum tariffs. The first, published in March, covered the tariffs only, and the second, published in June, considered the possible impacts of retaliation on U.S. employment, by industry.

In an earlier report I critiqued the first of these studies and explained why the actual impacts of the tariffs would be quite minor and why the study should be treated as an outlier in studies of tariffs, not as a guide to policy decision. In particular, the study results were “driven overwhelmingly by a nonstandard modeling assuming: that growth in the U.S. economy is constrained by aggregate demand.” This not how the vast majority of such studies are done, and it certainly is not justified in an economy that has been growing steadily for the past eight years and that has had an unemployment rate of 4 percent or less for the past seven months. Finally, the macroeconomic effects of tariffs on aggregate demand are ambiguous, not clearly contractionary, as the Trade Partnership report implies. Despite this critique, the Trade Partnership economists doubled down in their most recent study, as shown in Table 3, nearly trebling their estimates of the jobs likely to be lost due to the steel and aluminum tariffs.

Now, with the benefit of hindsight, we have an opportunity to compare the Trade Partnership predictions with the actual performance of the economy in the wake of the tariffs. To date, history has not been kind to their predictions.

The Trade Partnership studies claimed that while the tariffs would save thousands of jobs in primary metals industries, hundreds of thousands of jobs would be eliminated in the rest of the economy. This report also demonstrates that, to date, there is absolutely no evidence of such negative downstream effects to be found anywhere in the U.S. economy. In total, the U.S. manufacturing sector has added 176,000 jobs (including at least 2,700 in iron and steel production) between February and October 2018. In addition, 300 jobs were added in (total) aluminum production, and 1,600 jobs were lost in other nonferrous production (for example, copper production).

It is also important to note that 8,500 jobs have been added, to date, in the motor vehicle and parts sector, in contrast with the predictions of both Trade Partnership studies and the industry complaints cited above. Outside of manufacturing, an additional 1,449,000 jobs have been created in this same period. With respect to the claims of the beer industry, for example, 513,200 jobs have been added in “personal and recreational services,” a category that includes food services and drinking places, which, alone, gained 120,000 in this period. If jobs were lost in beer retailing due to the 0.6 percent increase in the cost of cans, it would be hard to find any evidence of those losses in this industry. There is absolutely no evidence that the imposition of tariffs in the aluminum (or steel) industries have had the kinds of negative employment impacts—in downstream manufacturing or other parts of the economy—that were predicted by critics of the aluminum tariffs.

Conclusion

This report has demonstrated that, to date, the aluminum tariffs have had their intended effect: The domestic producers of both primary aluminum and downstream aluminum products have made commitments to create thousands of jobs, invest billions of dollars in aluminum production, and substantially increase domestic production since Section 232 tariffs were imposed on March 8, 2018.

Acknowledgments

The author thanks Josh Bivens and Robert DeFrancesco for comments, Melat Kassa and Zane Mokhiber for technical and research assistance, and Lora Engdahl and Krista Faries for editing assistance.

Endnotes

Robert E. Scott, testimony before the U.S. Department of Commerce on aluminum imports, Washington, D.C., June 22, 2017.

Section 232 provisions allow for the imposition of tariffs if the Commerce Department finds that imports are threatening America’s industrial base. See U.S. Department of Commerce, Office of Public Affairs, “Secretary Ross Releases Steel and Aluminum 232 Reports in Coordination with White House” (press release), February 16, 2018.

Joseph Francois and Laura M. Baughman, Does Import Protection Save Jobs? The Estimated Impacts of Proposed Tariffs on Imports of U.S. Steel and Aluminum, Trade Partnership, March 2018.

Robert E. Scott, Estimates of Jobs Lost and Economic Harm Done by Steel and Aluminum Tariffs Are Wildly Exaggerated, Economic Policy Institute, March 2018.

Employment effects data in this report are through October 2018, except as otherwise noted.

Robert E. Scott, testimony before the U.S. Department of Commerce on aluminum imports, Washington, D.C., June 22, 2017.

Robert E. Scott, testimony before the U.S. Department of Commerce on aluminum imports, Washington, D.C., June 22, 2017.

Joseph Francois and Laura M. Baughman, Does Import Protection Save Jobs? The Estimated Impacts of Proposed Tariffs on Imports of U.S. Steel and Aluminum, Trade Partnership, March 2018.

Keith Naughton, “Ford Calls Rising Steel, Aluminum Prices ‘Significant Headwind’,” Bloomberg, August 8, 2018.

Robert E. Scott, “Opinion: GM Cutbacks a Result of Overvalued Dollar,” Detroit News, December 1, 2018.

CRU, Aluminum Market Outlook, “Table 2.8, North American Production,” 2018.

CRU, Aluminum Market Outlook, “Table 2.8, North American Production,” 2018.

Board of Governors of the Federal Reserve System, Industrial Production and Capacity Utilization–G.17, last updated March 23, 2018.

John Dunham & Associates, The Impact of Potential Aluminum Import Tariffs or Quotas on America’s Malt Beverage Industry, prepared for the Beer Institute, Washington, D.C., March 2018.

Beverage Information Group, “Beer Volume Declines Continue, Despite Gains in Craft and Imported Brews” (press release), October 10, 2018.

John Dunham & Associates, The Impact of Potential Aluminum Import Tariffs or Quotas on America’s Malt Beverage Industry, prepared for the Beer Institute, Washington, D.C., March 2018.

Joseph Francois and Laura M. Baughman, Does Import Protection Save Jobs? The Estimated Impacts of Proposed Tariffs on Imports of U.S. Steel and Aluminum, Trade Partnership, March 2018.

Estimates of agricultural employment are only available on an annual basis. No comparative data are available yet for trends in farm employment. Employment data for some sectors (NAICS four-digit and lower) is only available through September 2018, as shown in Table 3.

Joseph Francois and Laura M. Baughman, Does Import Protection Save Jobs? The Estimated Impacts of Proposed Tariffs on Imports of U.S. Steel and Aluminum, Trade Partnership, March 2018; Joseph Francois, Laura M. Baughman, and Daniel Anthony, ‘Trade Discussion’ or ‘Trade War’? The Estimated Impacts of Tariffs on Steel and Aluminum, Trade Partnership, June 2018.

Robert E. Scott, Estimates of Jobs Lost and Economic Harm Done by Steel and Aluminum Tariffs Are Wildly Exaggerated, Economic Policy Institute, March 2018. Unemployment data are from the Bureau of Labor Statistics, Labor Force Statistics from the Current Population Survey, “Unemployment Rate (Seasonally Adjusted), 16 Years and Over,” October 2018 data (Excel sheet, accessed December 4, 2018).

The Trade Partnership studies did not distinguish the subsectors of aluminum and other nonferrous metals, which are of interest in this study.

Recently announced auto industry plant closures have more to do with the expected impacts of the overvaluation of the U.S. dollar and the impacts of the overall economic policies of the Trump administration than with the steel and aluminum tariffs. See Robert E. Scott, “Opinion: GM Cutbacks a Result of Overvalued Dollar,” Detroit News, December 1, 2018.

Bureau of Labor Statistics, Employment, Hours, and Earnings from the Current Employment Statistics Survey (National), “All Employees, Thousands, Food Services and Drinking Places (Seasonally Adjusted),” October 2018 data (Excel sheet, accessed December 4, 2018).

Table notes

Table 1, U.S. aluminum restarts/expansions since 232 implementation, February 2018–October 2018

The sources for each plant announcement are as follows:

Primary aluminum plants

Century Aluminum (Sebree, Ky.): Century Aluminum Company, “Century Aluminum Announces Expansion of Sebree Casthouse” (press release), November 28, 2018. Century Aluminum (Hawesville, Ky.): Michelle Fox, “Trump’s Tariffs Allow Us to Invest $100 Million and Hire Hundreds: Century Aluminum CEO,” CNBC, March 1, 2018. Magnitude 7 Metals (Marston/New Madrid, Mo.): Scott Seal, “Magnitude 7 Metals to Reopen Old Noranda Aluminum Smelter, Create 450 Jobs,” Delta Dunklin Democrat, March 13, 2018. Alcoa (Warrick, Ind.): Alcoa Corporation, “Alcoa Corporation Plans Partial Restart of Aluminum Smelter at Warrick Operations” (press release), July 11, 2017.

Downstream facilities

Ellwood Group (Hubbard, Ohio): The Business Journal, “Ellwood Group to Build $60M Aluminum Plant in Hubbard,” September 19, 2018. Benada Aluminum (Sanford, Fla.): Orlando Sentinel, “Benada Expands Sanford Aluminum Plant, Says Tariffs Boost Demand,” November 20, 2018. Hydro (Schuylkill County, Pa.): Stacy Wescoe, “Aluminum Manufacturer Announces $100M Expansion; 60 Jobs Could Be Added,” Lehigh Valley Business, September 28, 2018. JW Aluminum (Russellville, Ark., Williamsport, Pa., and St. Louis, Mo.): Charleston Regional Business Journal, “JW Aluminum Upgrading Foil Production Facilities,” September 20, 2018; see also Nicole Snyder, “JW Aluminum to Invest over $30 Million in Equipment Upgrades for Foil Production” (press release), September 20, 2018. Braidy Industries (Ashland, Ky.): Morgan Watkins, “Braidy Industries Breaks Ground on Bevin-Backed, $1.5B Aluminum Mill,” Louisville Courier Journal, June 1, 2018. Novelis (Guthrie, Ky.): Novelis, “Novelis Inc., the World Leader in Aluminum Rolling and Recycling, Will Build an Approximately $300 Million Automotive Aluminum Sheet Manufacturing Facility in Guthrie, Kentucky” (press release), May 14, 2018. Granges (Newport, Ark.): George Jared, “Granges to Restart Newport Plant, Hire 100 New Employees,” Talk Business and Politics, May 2, 2018. JW Aluminum (Goose Creek, S.C.): Aluminum Insider, “JW Aluminum Announces US$225 MM Expansion to Plant in SE South Carolina,” June 15, 2018. Matalco (multiple locations): Matalco, “Matalco Inc Announces Multiple Greenfield Aluminum Plants for Production in Q-3, 2019” (press release), March 6, 2018. Arconic (Nash, Texas): Junius Stone, “Arconic to Add 35 Jobs Next Year,” Texarkana Gazette, August 8, 2018. See also KSLA staff, “Nash Plant Purchased for $300 million,” KSLA News 12, October 4, 2018. Granco Clark (Belding, Mich.): Brandon Schreur, “‘Misunderstood Industry’: Lieutenant Governor Brian Calley Visits Belding’s Granco Clark in Light of Expansion,” Daily News, May 26, 2018. Pennex Aluminum (Leetonia, Ohio): Tom Giambroni, “Pennex Aluminum Moves Ahead with Expansion,” Morning Journal, September 30, 2018. Gateway Extrusions (Union, Mo.): News Editor, “Gateway Extrusions Marks Expansion and 15th Year,” USGlass News Network, October 10, 2018. Elixir Extrusions (Douglas-Coffee County, Ga.): Area Development News Desk, “Elixir Extrusions Expands Douglas-Coffee Country, Georgia, Plant,” Area Development, August 23, 2018. Granges (Hundington, Tenn.): Shirley Nanney, “Gränges Breaks Ground for $110 Million Plant Expansion,” CarrollCountyNOW.com, November 20, 2017. Aleris (Lewisport, Ky.): Britney Taylor, “Aleris Expanding Its Plant in Lewisport,” 44 News, November 16, 2018. Logan Aluminum (Logan County, Ky.): News-Democrat & Leader, “Logan Aluminum Cuts Ribbon on Initial Expansion, Breaks Ground on Phase II: Projects Total $407.6 Million in Investments, About 250 Jobs,” October 27, 2017. Service Center Metals (Richmond, Va.): John Reid Blackwell, “Prince George-Based Service Center Metals Plans $45 Million Expansion, Creating 58 Jobs,” Richmond Times-Dispatch, January 11, 2018. Superior Extrusion (Marquette, Mich.): Lisa Bowers, “U.P. Company Solidifies Expansion Plans with $10.5 Million Investment,” The Mining Journal, September 28, 2017. Bonnell Aluminum (Niles, Mich.): Bonnell Aluminum, “Bonnell Aluminum Announces Start-Up of New Extrusion Line” (press release), June 14, 2017. Mid-States Aluminum (Fond du Lac, Wis.): Mid-States Aluminum Corp., “Mid-States Aluminum Invests in New Press Line and Expands Facility” (press release), December 6, 2017. Magnode (Trenton, Ohio): Eric Schwartzberg, “It’s Already Been a Big Month for This 70-Year-Old Butler Country Company, and a $13M Expansion Is Coming,” Journal-News, January 24, 2018.