Donald Trump’s Senior Counsel for Trade and Manufacturing, Peter Navarro, has a fantasy in his mind about the dimension of Australia’s exports of aluminium, or aluminum, as he would call it. In an opinion piece published in USA Today entitled “Trump tariffs will save American jobs and level the playing field” with the sub-title “President Donald Trump’s tariffs on aluminum imports is about far more than a trade battle. It’s a fight for the survival of an essential American industry”, Navarro wrote:
“Consider Australia. Its heavily subsidized smelters operate below cost, giving them an unfair dumping advantage, while Australia’s close ties to China further distort global aluminum trade.”
Navarro does not explain what the “close ties with China” might mean, so one can assume that this is thrown in primarily for propaganda purposes to excite the agitated response of the MAGA peanut gallery.
Navarro goes on to write:
“Initially, voluntary restraint agreements in lieu of the Trump tariff kept Australian exports in check. However, once Biden took office, exports surged. In 2024, Australian capacity utilization hit 90 per cent even as American capacity utilization plummeted to nearly 50 per cent.”
And further:
“Meanwhile, Alcoa and Rio Tinto, which dominate both Canadian and Australian aluminum markets, have strategically shifted exports to the United States between the two countries to maximize profits. (China is the largest Rio Tinto shareholder.)”
Mr. Navarro implies that the Commonwealth Government and other governments are just throwing money at aluminium smelters. This is not the case. Whilst the previous Commonwealth Government did provide a $120 million subsidy to the Portland Aluminium smelter in 2021 the current Commonwealth Government’s ‘Green Aluminium Production Credit’ in an incentive based scheme. Industry has to invest in order to receive the credit, which is aimed at reducing emissions. The scheme is not designed as some form of trade related subsidy:
“The Green Aluminium Production Credit will drive deep decarbonisation and allow our aluminium industry to benefit from the emerging global green metals market opportunity.
“The $2 billion Green Aluminium Production Credit, available from 2028–29, will support Australia’s aluminium smelters to transition to renewable electricity. The credit will position Australian aluminium as some of the greenest in the world.
“Smelters that can show new significant decarbonisation before 2036 can negotiate an emissions-linked credit contract payable per tonne of green aluminium produced for up to 10 years.
“We will base final credit rates on individual facility circumstances and be dependent on reducing Scope 2 emissions. Scope 2 emissions are indirect greenhouse gas emissions associated with the purchase of electricity, steam, heat or cooling. They account for around 85% of emissions from aluminium smelting.
“A review in 2030 will evaluate the credit design and market impact.”
The majority owner of the Portland Aluminium smelter is Alcoa Australia. Mr. Navarro does not mention that Alcoa Australia, which he singles out in his article, is actually owned by its parent, a US company – Alcoa Corporation (NYSE: AA; ASX: AAI), headquartered in Pittsburgh USA.
In 2022, Alcoa dividends paid to the American and Australian owners of Alcoa’s operations in Australia more than doubled to $1.29 billion despite just a 7 per cent profit increase.
“With Alcoa’s acquisition of Alumina, the Alcoa World Alumina and Chemicals (AWAC) joint venture is now fully owned and controlled by Alcoa. Alcoa previously held a 60 percent ownership interest in AWAC. AWAC consists of a number of affiliated entities that own, operate or have an interest in bauxite mines and alumina refineries in Australia, Brazil, Spain, Saudi Arabia and Guinea. AWAC also has a 55 per cent interest in an aluminum smelter in Victoria, Australia.”
So, Mr. Navarro, rest easy, all that aluminium being ‘dumped’ in the USA by Alcoa, the subsidy paid to the Portland Aluminium smelter and the Green Aluminium Production Credit is making money for… the USA!
Mr. Navarro claimed also that China is the largest Rio Tinto shareholder. Indeed, the Aluminum Company of China (Chinalco) is the largest shareholder in Rio Tinto plc at 14.02 per cent which reduces to around 11 per cent when combined with the Rio Tinto Ltd share register, Rio Tinto being dual listed in both Australia and the United Kingdom. Chinalco is prevented from holding more than 15 per cent of the share register in any event through agreement with the Commonwealth of Australia. As the Rio share buyback scheme has progressed the Chinalco shareholding in percentage terms has increased a little as fewer shares are outstanding. Nevertheless, the 15 per cent limit is there. Chinalco have no board representatives, which would usually be the case with the largest shareholder. So, the Chinalco shareholding is essentially passive. Not perhaps what Mr. Navarro would like us to believe.
Further, Mr. Navarro’s assertion that Australia is drowning the US market in aluminium simply does not stack up. For the whole period January 2015 to December 2024, Australia had a total trade surplus in aluminium of USD 2,964,548,119 (USD 2.9 billion) well behind Canada (USD 60.6 billion), China (PRC)(USD 23.6 billion), United Arab Emirates (USD 13.2 billion), Russian Federation (USD 7 billion), Bahrain (USD 6.7 billion), Germany (USD 4.8 billion), Argentina (USD 4.2 billion), South Africa (USD 3.9 billion) and Colombia (USD 3.3 billion). For the shorter period January 2022 to December 2024, Australia had a total trade surplus in aluminium of USD 1,462,771,372 (USD 1.4 billion) well behind Canada (USD 25.4 billion), China (PRC) (USD 8.8 billion), United Arab Emirates (USD 4.7 billion), Bahrain (USD 2.7 billion), Colombia (USD 1.8 billion), Argentina (USD 1.58 billion) and Germany (USD 1.5 billion). (Data source: Global Trade Tracker).
As Dr. Valdimir Tyazhelnikov, an expert in international trade from the School of Economics, University of Sydney, says – Australia exports approximately 10 per cent of its aluminium and steel to the United States – “Although Australian aluminium exports to the US have grown significantly in recent years, Australia remains a minor supplier. It is the 10th largest exporter to the US, accounting for just two percent of total US aluminium imports. In contrast, Canada dominates the market with a 40 percent share, followed by China, Mexico, and the UAE,” says Dr Tyazhelnikov.
Surpassing all of this is the significant trade surplus which the US enjoys overall with Australia, every year:
“Australia Trade Summary
“U.S. goods trade with Australia totalled an estimated $51.3 billion in 2024. U.S. goods exports to Australia in 2024 were $34.6 billion, up 3.1 per cent ($1 billion) from 2023. U.S. goods imports from Australia totalled $16.7 billion in 2024, up 4.7 per cent ($745.7 million) from 2023. The U.S. goods trade surplus with Australia was $17.9 billion in 2024, a 1.6 per cent increase ($279.7 million) over 2023.” (Office of the U.S. Trade Representative)
So, given the absence of facts from Mr. Navarro’s emotive arguments, what is happening here? It all feels like a throw back to the “let’s give this man something to deny” days of Richard Nixon. A false accusation is created in order to put the other party on the defensive in regard to other discussions, in this case, perhaps to do with defence, agriculture, AUKUS, whatever the Emperor’s court decides to fix upon at the time.
Australia really needs not to fall into this trap.
