Aluminum Is Now A Hot Topic In Supply Chain And Trade

Last Friday, February 24, 2023, the Biden Administration issued a Proclamation on Adjusting Imports of Aluminum into the United States. You can read the full proclamation here.

The Proclamation states that, beginning on March 10, 2023, a 200% ad valorem tariff will be imposed on all aluminum articles and derivative aluminum articles produced in Russia. Additionally, on April 10, 2023, a 200% ad valorem tariff will be imposed on aluminum articles where any amount of primary aluminum or derivative aluminum articles used in the manufacture of the articles was smelted or cast in Russia.

The purpose of the Biden Administration’s Russian aluminum tariff is, according to the President, to respond punitively to Russia’s “unjustified, unprovoked, unyielding, and unconscionable war against Ukraine.” Indeed, the Russian aluminum industry is a key part of Russia’s defense and has played a major role in supplying Russia with weapons and ammunition. In addition, Russia’s conflict in Ukraine has caused global energy prices to rise, causing direct harm to the United States’ aluminum industry.

According to the Proclamation, Russia has been among the major sources of aluminum used in the United States. While US aluminum imports from Russia have declined since 2018, Russia remains the fifth largest source of imported aluminum in the United States, and imports of aluminum from Russia increased in both 2021 and 2022. Notably, Russia’s aluminum industry is extremely export oriented. In fact, Russia is the largest exporter of unwrought aluminum in 2021, while Russia’s own consumption accounted for just 22% of its production in 2021 and 2022.

The Biden Administration is not only scrutinizing Russian aluminum imports; aluminum has also received increased scrutiny from US Customs and Border Protection (CBP) under the Uyghur Forced Labor Prevention Act (the “UFLPA”).

As we have blogged about here, here, here, here, here, and here, President Biden signed the UFLPA into law in December 2021, which went into effect June 21, 2022. The UFLPA creates a rebuttable presumption that “any goods, wares , articles, and merchandise mined, produced, or manufactured wholly or in part in the Xinjiang Uyghur Autonomous Region [XUAR] of the People’s Republic of China” (or by an entity included on a list required by the Act) is prohibited from importation into the US under 19 USC §1307. Indeed, CBP has not been sitting idle in its enforcement of the UFLPA, but rather has been actively assessing and analyzing the import of goods into the United States to ensure the goods meet the evidentiary standard to seize the presumption.

At the outlet, CBP specifically identified cotton, polysilicon, and tomatoes as high-risk commodities. Imported aluminum, however, is now receiving greater attention by CBP.

According to AP Moller – Maersk (“Maersk”), a global supply chain logistics solution company, CBP has begun issuing detention notices for aluminum products pursuant to the UFLPA. Maersk reported that the CBP will most likely “focus on aluminum automotive commodities and other commodities classified in Chapter 76 (Aluminum and articles thereof)” in its forced labor assessment function.

Of course, during the review process, an importer can demonstrate that imported goods are not sourced wholly or in part from the XUAR or an entity on the UFLPA Entity List. To do this, importers need to provide documentation produced in the ordinary course of business (and translated into English if necessary), including, but not limited to:

  • Transaction and Supply Chain Records:
    • full records of transactions and supply chain documentation that demonstrates the country of origin and its components (eg, packing list, bill of lading, manifest)
  • Documents Demonstrating the Parties Participating in the Transaction:
    • all parties involved in the manufacture, manipulation, or export of a particular good (eg, summarize the roles of parties involved as substantiated by other supporting documents, flow charts of supply chain)
  • Documentation Relating to the Payment and Transportation of Raw Materials:
    • the origin of the raw materials, and documentation showing that these business transactions (eg, invoices, contracts, purchase orders) have occurred financially (eg, proof of payments) and physically (eg, documents to support goods were transferred from one entity to another .)

To prevent any goods from being detained, companies importing aluminum products or commodities with aluminum components should take proactive measures to ensure compliance with the UFLPA. A few resources to aid compliance can be found here and here.

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