In March 2023, the Department of Commerce (DOC) made an unfortunate preliminary decision to impose new import duties on South Korean and Thai aluminum foil products after wrongly concluding that their producers were circumventing antidumping and countervailing duty orders on aluminum foil from the People’s Republic of China. If finalized in its current state, this self-initiated and shortsighted decision will inflict tens of millions of dollars in costs on American packaging producers, result in the loss of American manufacturing jobs to overseas competitors and raise prices for thousands of everyday household products. The DOC should not be in the business of inflicting pain on United States manufacturing markets, and it must reverse course to properly protect both American manufacturing and families.
Not only do these new fees distort global markets, but there is also simply not enough domestic manufacturing of converting foil for these applications to replace overseas imports. Threatening America’s access to these supply chains in turn threatens domestic packaging jobs and the availability of everyday consumer products. To make matters worse, DOC has already recognized the lack of sufficient domestic aluminum foil production by granting hundreds of exemptions to manufacturers from an earlier round of tariffs in 2018. These exemptions, however, are not carried forward into the duties on Thai and South Korean foil, which are retroactive from July 2022.
The best pathway forward will require the DOC to update the decision with more appropriate remedies in its final determination expected in October 2023. First, the circumvention finding for South Korea should be recanted. DOC properly determined that South Korean producers’ own domestic investments have generated significant foil manufacturing and R&D bases in South Korea. Second, DOC also properly found ultra-thin foil production is more substantial and involves more production steps than some other types of foil. Thus, should a final determination be made to impose additional duties, South Korean aluminum foil foil should be exempt. In addition, for converter grade foil or ultra-thin gauge packaging foil, DOC can maintain consistency with its own past practices and exempt Thai and South Korean ultra-thin foil from crushing duties using an end-use certification exemption. This would ensure the continued U.S. manufacturing of packaging for critical end-use products.
If these rectifying steps are not taken, it will mean higher costs for American businesses and consumers on the heels of the highest inflation rates in decades. It also means the loss of American jobs to offshore competitors by rendering U.S. packaging manufacturers uncompetitive in global markets. While vital, aluminum foil is one substrate of many that go into packaging and is not interchangeable with other substrates for many products. Thus, moving aluminum foil packaging offshore will also result in the loss of jobs for paper, film, adhesives, fitments, inks, and other packaging components. On top of these increased consumer costs and job losses, there is also the risk of unintended consequences to U.S. supply chains for food and medical supplies in an already fragile ecosystem.
Aluminum foil is used as a barrier to provide sterility and shelf-stability for a host of foods, health products and medical devices, and it makes a literal life-or-death difference. There is no equal substitute for the barrier protection aluminum foil provides, and the DOC’s actions make it more difficult to provide the best products for the U.S.’s most critical needs.
U.S. packaging manufacturers support efforts to protect domestic manufacturing and national security. But the DOC’s preliminary determination wrongfully undermines U.S. producers, endangers jobs and threatens to make everyday products scarce and more expensive for American consumers. The DOC must course correct to protect domestic packaging manufacturers and avoid putting more stress on Americans’ finances.