How US dumping duties will affect Egypt’s aluminum industry

The US industry’s anti-dumping petitions argued that “common alloy aluminum sheet from Bahrain, Brazil, Croatia, Egypt, Germany, Greece, India, Indonesia, Italy, Oman, Romania, Serbia, Slovenia, South Africa, South Korea, Spain, Taiwan, and Turkey was dumped in the United States,” which harms the domestic economy.

On March 8, 2018, US President Donald Trump had imposed 25% tariffs on imported steel and 10% tariffs on imported aluminum. “I have the right to go up and down and drop out countries or add countries,” he told reporters at a Cabinet meeting on that day.

Ever since, Egypt has been struggling to rid itself of these tariffs. On March 19, 2018, it announced it is negotiating its exemption with the United States.

The Egyptian-US negotiations continued for more than two months, until Tarek Kabil, Egypt’s minister of trade and industry, revealed on May 9, 2018, that the United States has yet to make up its mind on dropping Egypt from the countries to be hit by the import tariffs. “Negotiations have not stopped since the announcement of the [tariffs] decision and direct discussions were held with the US trade secretary to discuss Egypt’s chances of being dropped from the list. But so far, we have not received a final response,” Kabil told reporters back then.

In a phone call with Al-Monitor, Mohamed Sayed Hanafi, head of the Chamber of Metallurgical Industries, said, “If new tariffs are imposed on aluminum imports, exports will fall significantly with the shrinking of iron exports to the United States. Iron exports exceeded $100 million in 2017, but hit a $38 million low in the first 10 months of 2019, with a decline of 53.3%.”

He added, “Iron exports to the United States kept dwindling in the first two months of 2020 to $4 million, compared to $12.8 million in the same period in 2019, a decrease of 68%.”

Hanafi pointed out that all economic forecasts expected the decline in Egyptian iron exports in general and to the United States in particular, after the decision to implement the US anti-dumping tariffs. The United States and some European countries are among the largest markets for Egyptian iron, characterized, before the imposition of the tariffs, by its price competitiveness in the US market.

According to Ahmed el-Sayed, a researcher specializing in US affairs at Al-Ahram newspaper, Egyptian-US relations will not be affected by the decisions to impose these tariffs, even though they are economically harmful.

He told Al-Monitor, “The deep-rooted and strong US-Egyptian relations will not be budged by temporary economic differences that can be solved through negotiations. Egypt is already benefiting from US customs discounts and exemptions, most notably under the Generalized System of Preferences through which the United States exempts several developing countries, including Egypt, from customs duties. Also, under the Qualifying Industrial Zones protocol, Egypt can make some duty-free exports into the United States.”

Speaking to Al-Monitor, Abdel Khalek Farouk, an economist and director of the Nile Center for Economic and Strategic Studies, argued that imposing customs duties on Egypt’s iron and aluminum exports to the United States has greatly harmed Egyptian companies that rely on exports to the United States.

He explained that following the imposition of the tariffs, Egyptian companies started searching for other alternatives, most notably, entering new markets, mainly in the African continent, in addition to Saudi Arabia, which registers a large percentage of Egyptian iron exports.

Regarding aluminum exports to the United States, Farouk clarified that Egypt’s exports stood at $42 million in 2019 after the 10% tariff imposed by Trump. He warned, however, that additional anti-dumping duties would cause a sharp decline in the already decreasing Egyptian aluminum exports. 

“Egypt has been focusing recently on promoting its aluminum industry and its export,” he said. “This was mainly manifested in plans to develop the aluminum plant in Nag Hammadi on an area of ​​5,000 acres, with a production capacity of 325,000 tons per year. Expansion plans aim to increase production by 250,000 ton. Additional US anti-dumping tariffs, if imposed, will hamper the exports in some way, as the United States is one of the most important target markets.”