(Bloomberg) -- U.S. aluminum producers Alcoa (NYSE:AA) Corp. and Century Aluminum Co. jumped along with the price of the lightweight metal as the U.S. Commerce Department was said to recommend that President Donald Trump impose tariffs and quotas on imports.
Commerce proposed a 7.7 percent tariff on all aluminum imports and 23.5 percent on the metal when it comes from China, Russia, Venezuela and Vietnam, according to three people familiar with the recommendation. The department also proposed an aluminum quota of 86.7 percent of 2017 exports, they said, requesting anonymity because the recommendations aren’t public. Commerce is scheduled to brief reporters on its recommendations on both aluminum and steel imports on Friday.
Century surged as much as 9.9 percent while Alcoa gained 4 percent. Aluminum on the London Metal Exchange rose as much as 2.4 percent as of 4:58 p.m. in London.
Trump instructed the Commerce Department last year to probe whether imports of steel and aluminum represent a threat to U.S. national security. The investigation took place under the seldom-used Section 232 of the Trade Expansion Act of 1962. Commerce Secretary Wilbur Ross last month submitted his department’s final reports to Trump on steel and aluminum. The president now has until about mid-April to decide on any potential action.
Imposing tariffs on such widely used commodities may trigger retaliatory measures from China, the world’s biggest producer of steel and aluminum. It could also inflate manufacturing and consumer prices in the U.S., and inflame tensions with allies such as Japan, India, Germany and Canada. Group of 20 economies have pushed back against the threat of steel tariffs, warning such a move could set off a trade war.
Trump is facing resistance to tariffs from lawmakers in his own party. At a meeting this week at the White House, at least seven Republican lawmakers argued against any action that might set off a tit-for-tat response from China or other countries.
Trump said the U.S. steel and aluminum industries “are being decimated by dumping and from many countries.” The administration is now considering “all options, and part of the options would be tariffs,” he told lawmakers at the meeting. Such measures would encourage steel and aluminum producers to come back to the U.S., he said. Some companies in the steel industry, as well as unions such as United Steelworkers, have been pushing the president to come down hard on imports.
Speculation about possible U.S. action has roiled the metals industry. Imports of steel increasing last year on anticipation that new tariffs would elevate costs.
