US: US Customs and Aluminium importers find themselves facing a daunting challenge as they seek to avoid triggering a hefty new 200% tariff by ensuring that a host of products sourced from across the globe remain free from any trace of Russian smelted Aluminium.

Although it is a simple matter to determine the origin of raw metal entering the country, including from Russia, detecting or tracing the presence of Russian metal in a refined product that has already undergone extensive processing and is closer to reaching the end consumer is an incredibly complex task. In order to adhere to the tariff, importers have an obligation to disclose the source of primary Aluminium included in a diverse range of Aluminium products to US Customs and Border Protection. Unless certain narrow exceptions apply, the tariff will be levied on any product containing primary Aluminium that has been smelted in Russia.

The Biden administration launched a package of new tariffs and sanctions on Feb. 24 against Russia's invasion of Ukraine, which started a year ago. The tariffs included restrictions on Russian metals and minerals and expanded penalties led by the US against Russia since early 2022.

Following a separate 200% tariff on direct imports of Russian Aluminium implemented by the US on March 10, a new rule will be implemented on April 10 with uncertain implications for US Aluminium importers. Although there are still details to be finalized, the Biden administration is striving to develop a reasonable and feasible rule for the industry.

On April 10th, a new tariff was implemented targeting various items such as Aluminium bars, rods, plates, sheets, tubes, pipes, castings, and unwrought metal. Certain Aluminium products such as Aluminium wires and cables, motor vehicle bumper stampings, and tractor body stampings, are subject to this tariff.

One noteworthy aspect with potential commercial implications is that allies, and even adversaries, who have sourced items from a Russian smelter will face a staggering 200% tariff. This is especially pertinent given that historically, a small portion of a certain company's aerospace high purity Aluminium requirements had been produced in Russia.

Recent data shows that Russia has a crucial role in the global Aluminium industry, accounting for around 5.5% of the worldwide production and export of Aluminium. Among the major buyers of Russian Aluminium are China, Japan, Turkey, and India, which have shown a consistent demand for this product in recent years.

Interestingly, China's import of Russian Aluminium and Aluminium products has witnessed a significant upsurge of 59% in 2022, despite a decline in imports from the US and other countries. While Canada remains the top source of US Aluminium imports, the UAE and China are notable suppliers of US imports that may contain Russian Aluminium components that could undergo scrutiny.

With the imposition of tariffs, imports containing Russian Aluminium will become more expensive compared to alternatives that don't use it. This could lead companies to shift towards non-Russian imports. In such situations, shippers may also consider re-shoring or near-shoring as an option.