The Biden administration's decision to impose tariffs on $18 billion worth of Chinese goods across various sectors, including aluminum and steel, has sparked discussions about the potential benefits for domestic manufacturers. Yahoo Finance Executive Editor Brian Sozzi is joined by Century Aluminum (CENX) CEO Jesse Gary to discuss how these aluminum and steel tariffs against China will benefit American producers and plant workers, including that of his own company.
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Gary highlights a concerning imbalance, emphasizing that China produces a staggering 60% of the world's aluminum, while the United States has only 4 smelters dedicated to aluminum production&#; attributing this to "unfair trade practices on the Chinese side." Gary notes that aluminum has a plethora of use cases in modern-day life, making the inability to produce it domestically "a major problem."
"Everyone realizes that in order to be secure, in order to have economic security and national security, we need to be able to produce these core critical minerals at home," Gary tells Yahoo Finance, adding that he is "thrilled" to see the promotion of domestic manufacturers through these tariff measures.
Catch Brian Sozzi's exclusive interview with President Biden where he discusses what these new trade tariffs hope to achieve.
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Jesse.
Thanks so much for joining our finance.
We appreciate it.
Thanks, glad to be here.
So uh the president has come out very strong uh new towers on certain sectors.
Tell us how China's practices have impacted your business and your industry.
Yeah, I mean, there's a very good example.
So since the year , the Chinese produced 5% of world aluminum.
At that point today, they produce over 60% of the world's aluminum.
That same time period, us had 25 smelters in .
Today we're down to four.
So this massive overcapacity fueled by sort of unfair trade practices from the Chinese side has had this direct impact on us.
Aluminum production.
Sounds like a potential national security issue if we only have what, four smelters in this country.
That's right.
Absolutely.
And aluminum is in everything.
I spoke about it a bit today.
Uh It's everywhere from foil, in your, in your, in your kitchen, to electric vehicles, to fighter jets, to missiles.
It's, it's, it's everywhere in modern life and to not be able to produce it here.
It's a major problem.
Now, China said it would take their response to this, they would take the appropriate actions.
What would any actions from them mean to your industry?
Well, not much to be honest here at century, we're focused on bringing aluminum production back to the United States.
Uh You may have seen, we just received a grant from the Department of Energy for $500 million to build the first new aluminum smelter in the United States in 45 years.
Yes.
Yes.
So we'll have five and that take some time to get done.
Of course, this hasn't been done in 45 years, but we are super excited because in contrast to what the Chinese have done, our smelter will be green, it will be powered with cutting edge technology and renewable energy which will make it one of the greenest smelters in the world.
Why have these jobs in this industry moved over to China and overseas?
Well, it's really from Chinese industrial practice, subsidies, unfair labor practices, uh unfair trade practices dumping their metal onto the world market that's made it very difficult for uh Western producers to compete.
Um And so we are very thrilled that this administration has really stood up for, you know, domestic manufacturers and is focused on bringing manufacturing back here to the US.
What do you think will be the impact on inflation in this country to let's say aluminum foil, you know, putting it right directly to your industry, do these towers bring prices down?
And, and when does that even happen?
Yeah.
Well, I, I think one thing to keep in mind is the US is very short aluminum.
Uh, we don't, we don't produce enough or down to four.
We don't have enough to, to service our needs.
And from a, so from a security perspective, it's very important that we can produce what we need and we're 4 million tons short on, on the aluminum side to be able to do that.
So we're not any, even anywhere close to being able to produce our own needs, uh which is the real focus and we need to be able to do that from a national security perspective.
I mentioned this when I chatted with the, uh, the president.
Uh, look, the economy has been solid.
GDP, unemployment rate, wage gains.
Do you see that strength in your business?
Yeah, we started to see things turn, I will say on the manufacturing side, we did see some weakness uh for a period, but things have started to improve, uh earlier this year and things are starting to look up.
So we're excited about what's to come.
Can you compare what the Biden administration has done to what President Trump did now?
He championed himself as pro manufacturing, bringing jobs back to the US.
What did you see?
Yeah, I would say we've been thrilled with what the Biden administration has done.
Uh This focus on reshoring manufacturing, uh has led to direct investment from both century uh and others throughout uh the US economy.
Uh And I think what you're seeing just more broadly to speak to that is that everyone realizes that in order to be secure, in order to have economic security and national security, we need to be able to produce these core critical minerals at home.
Uh And we are ready to be a big part of that as a, as a key leader.
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Um We're coming up right against the the election.
Are you planning your business differently and or preparing for potential outcomes that may not be so good for the country?
Uh No, I mean, we're very bullish on the United States.
We wouldn't be announcing the first new smelter in 45 years.
If we weren't bullish on the United States, we think this is a great place to do business.
We think we can make a product that will be consumed here in the United States.
We can offer shorter supply chains to our customers.
Uh And so we're just excited and we're moving forward with full steam ahead uh and excited for what's to come.
What is the next decade of job creation look like for the aluminum industry?
Do you see yourself building that, that six smelter at some point?
Yeah, we hope so.
I mean, we hope to get the first phase of this new smelter done and then we hope to expand it after that.
Uh I mean, we've already said it will be new jobs at this one smelter alone will double the size of the US industry in and of itself.
Um So we'll start with that, but we definitely have expansion plans beyond them.
You know, I've talked to a couple of my contacts in the, in the chip making industry and they're opening up really big bold, new shiny facilities to make chips in this country.
But they're saying it's hard to find jobs.
Is it hard to find the labor you need for that smelter or another facility that you may wanna open?
Yeah, we've got a great workforce.
You know, we've, we've run smelters in this country for a long time.
Uh, our workers are highly trained, uh, highly skilled.
Uh, and we pay a living wage to our workers very good wage.
Uh And so what we found is if we invest in the community, we tend to be able to find the labor force we need in order to run the smelters and that's what we'll continue to do.
All right, we'll leave it there, Jesse.
Uh, thanks so much for making time for you all.
Find us.
We appreciate it.
Thanks, Brian.
Pleasure.
By Victor Reklaitis
Investors in Zeekr shrug off the news, sending the Chinese EV maker's stock higher in its first couple of sessions of trading on Wall Street
President Joe Biden on Tuesday is widely expected to roll out new tariffs targeting Chinese electric vehicles and other products, with the move coming as he faces a tight White House race against former President Donald Trump, who was known for his trade fights with Beijing.
Besides taking aim at China's inexpensive EVs, which have spooked Western automakers, Biden's new levies will focus on that country's batteries, critical minerals, solar products, steel and aluminum, according to multiple published reports.
Biden said a month ago that his administration could triple the tariffs on Chinese steel and aluminum from their current level of 7.5% on average. Critics have characterized such a move as largely "political symbolism," because the U.S. doesn't rely on China for those metals.
Biden's increased tariff on Chinese EVs (NIO) (LI) - which is expected to amount to 102.5%, up from the current level of 27.5% - is getting a similar reaction. The higher rate will have "minimal near-term economic impact" because of the "extremely low penetration of Chinese EVs in the U.S. market today," Evercore ISI analysts Sarah Bianchi and Matthew Aks, both of whom previously served in the Biden administration, said in a note Monday.
Underscoring that point, Chinese EV maker Zeekr Intelligent Technology Holding Ltd. has been receiving a warm reception on Wall Street, with the company's stock (ZK) rising in its first couple sessions of trading despite the news about U.S. tariffs.
Biden's tariffs on Chinese batteries could have "more of a near-term impact given the current level of U.S. imports ($13 billion), as could critical minerals given China's continued dominance in processing," Bianchi and Aks said.
Chinese machinery used to make solar-panel components won't face new tariffs, according to a Bloomberg News report about Tuesday's rollout.
Trump now floats a 200% tariff
The higher tariffs on Chinese products are stemming from U.S. Trade Representative Katherine Tai's long-awaited review of Section 301 duties, which are named after a part of the Trade Act of .
Tai said last month that her team was "very close" to concluding that review of the Section 301 tariffs, which were imposed in by the Trump administration. The Biden administration won't announce any tariff rate reductions, according to Bloomberg's report.
Trump, the presumptive Republican presidential nominee, called for a 100% tariff on Chinese vehicles back in March while warning about Chinese car manufacturing in Mexico, and a range of Democratic and GOP politicians have also pushed for a tough stance toward Chinese automakers.
On Saturday, Trump took credit for Biden's upcoming tariff announcement.
"He listens to me," Trump said during a campaign rally in New Jersey. "He says he's going to put a 100% tariff on all Chinese electric vehicles. Isn't that nice? Should have done this four years ago."
The former president also upped the ante in his speech Saturday, suggesting he would see seek a 200% tariff on any Chinese vehicles made in Mexican factories.
"I will put a 200% tax on every car that comes in from those plants, and they're not going to do that because they'll destroy our automobile business," he said.
Chinese EV juggernaut BYD Co. (CN:) has said it's looking for a factory location in Mexico but that it's not planning to export to the U.S. and instead will focus on the Mexican market.
A poll released Monday found 43% of voters preferred Trump's handling of the economy to Biden's approach, while 35% backed Biden's approach over Trump's. Some 16% of voters said they trusted neither candidate, according to the poll, which came from the Financial Times and the University of Michigan's Ross School of Business.
What will the effects be?
U.S. automakers (GM) (F) (STLA) (TSLA), also known as original equipment manufacturers or OEMs, could benefit from Biden's much-anticipated move, according to Stifel analysts.
"While the devil is in the details, this could be a plus for domestic EV OEMs and legacy OEMs who are entrenched in the U.S. market. In our universe, Lucid (LCID) and Rivian (RIVN) both would likely benefit," they wrote.
Chris Low, chief economist at FHN Financial, highlighted that the new tariffs will be aimed at areas essential to Beijing's plans for its own economic recovery. "In other words, China does not sell many electric cars in the U.S., but up until these tariffs were announced, it intended to," Low wrote in a note.
Related: China's economy is slowing. But its old-age market is booming.
Owen Tedford, senior research analyst at Beacon Policy Advisors, stressed that Biden's upcoming move appears mostly focused on his getting re-elected in a period when protectionism is popular.
"For Biden, the tariff announcement is all about the election as it supports his industrial policy agenda and further builds his tough-on-China resume," Tedford said in a note.
"The bipartisan support for the duties also reflects the new Washington consensus on trade," the Beacon analysts added. "There is still a gradient, as shown by the gap between Biden and Trump, but free-trade advocates are now decidedly in the minority on both sides of the aisle."
-Victor Reklaitis
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