Closures, tight global supply chains and historic inflation are just a few of the obstacles that have weakened Colorado's economy in the past year. Another major obstacle to our recovery is the soaring price of steel and aluminum due to the Article 232 tariff imposed by the federal government. Although President Biden danced powerlessly and ineffectively on this issue at the recent U.S.-EU meeting, large amounts of steel and aluminum continue to face harmful taxes. As Sens. Pat Toomey (R-Pa.) and Mark Warner (D-Va.) proposed in their bipartisan legislation, removing these tariffs will help stimulate our recovery while reducing our carbon footprint.
President Trump imposed taxes on steel and aluminum imports in 2018 to protect domestic manufacturers under the protection of national security. However, these “protections” inhibited trade and raised raw material prices, damaging the economy that the policy was designed to help. The price of aluminum rose from US$1,600 per ton (pre-tariff tax rate) to US$2,800, harming all stakeholders from manufacturers to consumers. In addition, recent supply chain shortages have restricted daily market transactions, and Biden’s inflation has continued to climb. These harmful steel and aluminum tariffs make the situation worse.
As the owner of a small foundry and state representative, I am committed to abolishing these tariffs for our economic well-being and national competitiveness. These actions have also caused other metals to skyrocket; in my own business, we have seen metal prices rise by more than 45%. Obviously, Bauer and other local manufacturing companies have been affected by rising aluminum prices, but these policies have also hurt other industries. These tariffs affect almost every business in Colorado, from agriculture to real estate, to business and personal services. In 2020, the aluminum industry and related departments contributed US$983 million to our state’s economy and an additional US$55 million in taxes. These departments employ more than 3,000 residents and generate more than $234 million in salaries. Section 232 threatens high-paying jobs across the state.
The benefits of removing trade restrictions and opening up access to affordable aluminum are not limited to Colorado; the national aluminum industry directly supports 660,000 jobs. Just like in Colorado, industries directly related to aluminum are related to a wide range of industries, and their growth benefits the entire economy. Although the United States is struggling to cope with the continuing financial setbacks mainly caused by the poor decision-making and leadership of the White House, free trade provides a viable way to stimulate our recovery.
In addition to the economic damage it causes, Article 232 also exacerbates global carbon emissions. Current taxation limits the United States' access to low-carbon steel and aluminum. Compared with carbon-intensive production using coal-fired smelters, aluminum imported from Europe and Russia uses hydroelectric power. In addition, more aluminum supply in the United States reduces our domestic carbon footprint. Aluminum is lightweight and is an important metal in power lines, electric vehicles, solar panels, and future renewable solutions. Cutting Section 232 puts us on the right path to reduce our environmental impact through smarter solutions.
Quietly, amidst the noise and dysfunction in Washington, Sens. Toomey and Warner are pushing for bipartisan cooperation to resolve this trade issue. Their bill, the bicameral Congress Trade Authorization Act, will control the executive power in passing tariffs. Congress will be able to review all national security tariffs proposed by the President. The bill will ensure that the legislature can protect our national economy and strengthen our international trade relations.
Although these tariffs are designed to weaken China's influence, Section 232 works in the opposite direction, hurting domestic manufacturers and workers. Passing the bicameral Congress Trade Authorization Act to repeal Article 232 steel and aluminum tariffs will strengthen our economy and promote our recovery. Greater access to affordable aluminum can expand employment opportunities and protect existing employment opportunities in the United States. In addition, opening up steel and aluminum trade with Europe promotes low-carbon production and reduces global emissions. As the backbone of a free market economy, free trade will help push the United States forward.
Representative Mike Lynch represents District 49 of the Colorado State Capitol.
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