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Trump’s trade adviser says Australia is waging a ‘frontal assault’ on US aluminium markets. What’s really going on? Trump’s trade adviser says Australia is waging a ‘frontal assault’ on US aluminium markets. What’s really going on?
(about 11 hours later)
Peter Navarro claims aluminium makers in Australia are undermining the US. Are they really?Peter Navarro claims aluminium makers in Australia are undermining the US. Are they really?
Donald Trump’s trade adviser made several targeted critiques of Australia’s manufacturing industry in comments that may undermine Canberra’s bid to get an exemption from the US’s new steel and aluminium tariffs. Donald Trump’s trade adviser has made several targeted critiques of Australia’s manufacturing industry in comments that may undermine Canberra’s bid to win an exemption from new US steel and aluminium tariffs.
In a USA Today opinion piece that was shared by the White House, Peter Navarro wrote that Australia – and Canada – were waging “frontal assaults” on the US’s aluminium market. In a USA Today opinion piece shared by the White House, Peter Navarro wrote that Australia – and Canada – were waging “frontal assaults” on the US aluminium market.
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The American economist accused Australia of having an “unfair dumping advantage” because of our“heavily subsidised smelters”. The US economist accused Australia of having an “unfair dumping advantage” because of our“heavily subsidised smelters”.
But is that true? Guardian Australia has tested Navarro’s comments.But is that true? Guardian Australia has tested Navarro’s comments.
Is Australia a threat to US aluminium producers?Is Australia a threat to US aluminium producers?
“While Australia and Canada represent frontal assaults on our aluminum markets …” – Navarro Australia and Canada represent frontal assaults on our aluminum markets … – Peter Navarro
US aluminium production has been declining for decades, part of a larger pattern of decline in American manufacturing. US aluminium production has been declining for decades, part of a larger pattern of decline in manufacturing across the country.
China is now the dominant manufacturer of metal, while Canada has emerged as the single biggest exporter of aluminium to the US by far. In January, more than half of aluminium imports into the US came from Canada, according to data from the International Trade Administration. China is now the dominant manufacturer of metal, while Canada has emerged as the single biggest exporter of aluminium to the US by far. In January more than half of aluminium imports into the US came from Canada, according to data from the International Trade Administration.
It’s a trend the Trump administration wants to turn around.It’s a trend the Trump administration wants to turn around.
Australia has four aluminium smelters that produce the metal for the domestic and international markets. British Australian company Rio Tinto and the US-owned Alcoa are the major stakeholders. Australia has four aluminium smelters that produce the metal for the domestic and international markets. The British-Australian company Rio Tinto and the US-owned Alcoa are the major stakeholders.
Australian aluminium exports into the US accounted for less than 3% of the latter’s total, according to the January data. That’s in line with longer-term averages.Australian aluminium exports into the US accounted for less than 3% of the latter’s total, according to the January data. That’s in line with longer-term averages.
The description of Australia as representing a “frontal assault” on US markets, given its modest market share, has confounded government and industry alike.The description of Australia as representing a “frontal assault” on US markets, given its modest market share, has confounded government and industry alike.
Are Australia’s smelters heavily subsidised?Are Australia’s smelters heavily subsidised?
“Consider Australia. Its heavily subsidized smelters operate below cost, giving them an unfair dumping advantage …” – Navarro Consider Australia. Its heavily subsidized smelters operate below cost, giving them an unfair dumping advantage … – Navarro
Subsidies can be tricky to track, given state utilities can discreetly offer cut-price deals to their smelters and countries with state-owned banks may provide below-market financing. Subsidies can be tricky to track, given that state utilities can discreetly offer cut-price deals to their smelters and countries with state-owned banks may provide below-market financing.
Australia has traditionally used subsidies when a facility is under stress and it is deemed in the public interest to keep it running. For example, in early 2021, the then Morrison government and Victorian state government struck a $150m deal to underwrite the Alcoa smelter in Portland, in Victoria’s south-west, after it considered shutting down 1.5m tonnes of its smelting capacity.Australia has traditionally used subsidies when a facility is under stress and it is deemed in the public interest to keep it running. For example, in early 2021, the then Morrison government and Victorian state government struck a $150m deal to underwrite the Alcoa smelter in Portland, in Victoria’s south-west, after it considered shutting down 1.5m tonnes of its smelting capacity.
The deal was designed to help it secure its energy supply – and subsidise Alcoa’s income – when required to power down during peak energy demand.The deal was designed to help it secure its energy supply – and subsidise Alcoa’s income – when required to power down during peak energy demand.
But Navarro’s comments are probably not directed at that deal. They are almost certainly concerned with the January announcement of the federal government’s $2bn initiative to provide incentives for aluminium smelters to switch to renewable power.But Navarro’s comments are probably not directed at that deal. They are almost certainly concerned with the January announcement of the federal government’s $2bn initiative to provide incentives for aluminium smelters to switch to renewable power.
Navarro’s opinion piece even links to a Reuters story about the Albanese government initiative.Navarro’s opinion piece even links to a Reuters story about the Albanese government initiative.
The policy is designed to help reduce the largest cost to the smelters – energy – in what is turning into a global race to decarbonise the production of aluminium, as well as steel.The policy is designed to help reduce the largest cost to the smelters – energy – in what is turning into a global race to decarbonise the production of aluminium, as well as steel.
Similar incentives are in place across Europe. The government said the policy is essential to keeping smelters open and operating into the future, providing targeted support for smelters transitioning to renewable energy before 2036. Similar incentives are in place across Europe. The government said the policy was essential to keeping smelters open and operating into the future, providing targeted support for smelters transitioning to renewable energy before 2036.
But given the incentives are only available from 2028-29, they cannot have allowed subsidised smelters to operate below cost, as claimed. But given that the incentives are only available from 2028-29, they cannot have allowed subsidised smelters to operate below cost, as claimed.
Guardian Australia could not find any examples of US authorities accusing Australian aluminium producers of dumping the metal, a tactic that would typically be used to get rid of excess production.Guardian Australia could not find any examples of US authorities accusing Australian aluminium producers of dumping the metal, a tactic that would typically be used to get rid of excess production.
Navarro also claims Australia’s ties to China distort global aluminium trade. Navarro also claims Australia’s ties to China distort global aluminium trade. 
As a major exporter of raw materials, Australia has developed a close trade relationship with China over recent decades, especially when it comes to iron ore, used in steel-making. It also exports alumina, used to make aluminium, although China is not its primary destination. As a major exporter of raw materials, Australia has developed a close trade relationship with China, especially when it comes to iron ore, used in steel-making. It also exports alumina, used to make aluminium, although China is not its primary destination.
There’s no evidence, however, of how these ties distort aluminium trade. There’s no evidence of these ties distorting aluminium trade.
Did Australia break its agreement?Did Australia break its agreement?
“Initially, voluntary restraint agreements in lieu of the Trump tariff kept Australian exports in check.” – Navarro Initially, voluntary restraint agreements in lieu of the Trump tariff kept Australian exports in check – Navarro
While there was an agreement (or more precisely, a voluntary undertaking) between then prime minister Scott Morrison and Trump in 2019 to limit aluminium exports to the US, everything changed after the outbreak of war in Ukraine. While there was an agreement (or more precisely, a voluntary undertaking) between the then prime minister, Scott Morrison, and Trump in 2019 to limit our aluminium exports to the US, everything changed after the outbreak of war in Ukraine.
After Russia’s invasion, the Biden administration placed 35% tariffs on aluminium from Russia – who at the time was the third-largest supplier of the metal to the US.  Going back a little further – Morrison’s predecessor Malcolm Turnbull secured an exemption to tariffs imposed in Trump’s first term that, according to US trade data, saw US aluminium imports from Australia surge between 2018 and 2019, from around 134,000 metric tonnes to more than 268,000 metric tonnes.
According to US trade data, US aluminium imports from Australia initially surged between 2018 and 2019, from more than 134,000 metric tonnes to over 268,000 metric tonnes, after then prime minister Malcolm Turnbull secured an exemption to tariffs imposed in Trump’s first term. But after the aforementioned verbal agreement in 2019, exports dropped to 87,000 metric tonnes by 2020. 
But after the aforementioned verbal agreement was made in 2020, exports dropped to 87,000 metric tonnes.  Following Russia’s invasion, the Biden administration placed 35% tariffs on aluminium from Russia – which at the time was the third-largest supplier of the metal to the US. So Australia increased its aluminium exports to the US in 2022 and 2023 to meet the uptick in demand from our most powerful ally, to more than 200,000 metric tonnes.
So, Australia increased its aluminium exports to the US in 2022 and 2023 to meet the uptick in demand from our most powerful ally, to more than 200,000 metric tonnes.
It meant Australia was suddenly the fourth-largest exporter. It meant Australia was suddenly the fourth-largest exporter. 
But exports in 2024 dropped to below 2020 levels, bringing Australia back down to the eighth-largest supplier of aluminium, behind countries including Canada, Bahrain, China and South Korea.But exports in 2024 dropped to below 2020 levels, bringing Australia back down to the eighth-largest supplier of aluminium, behind countries including Canada, Bahrain, China and South Korea.
The long and short of it? If Australia did renege on its verbal agreement, it only did so in response to a push by the US to find non-Russian sources of the metal.The long and short of it? If Australia did renege on its verbal agreement, it only did so in response to a push by the US to find non-Russian sources of the metal.