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Self-Inflicted Injury: Aluminum Sanctions Against Russia Harm U.S Industry

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US President Donald Trump hoped that the introduction of import tariffs on steel and aluminum as well as the introduction of sanctions against the Russian aluminum giant Rusal would contribute to the growth of American producers’ profits.

However, according to the Wall Street Journal, these measures did not work: the sanctions against Rusal caused a sharp rise in the price of alumina, the raw material, which affects the financial results of US companies.

The sanctions have pushed up prices for aluminum’s key ingredient, alumina, eating into the profits of US producers, analysts and aluminum makers say.

Rusal is responsible for 6% of the global production of alumina. Due to sanctions against the Russian company, irregularities in supplies of this raw material by Brazil’s Alunorte (the largest alumina refinery in the world) and a workers’ strike at three plants of the Australian company Alcoa, alumina prices have increased significantly.

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According to CRU Research’s survey, in mid-September 2018, alumina prices grew 60% over the same period last year to $652 / tonne.

According to the WSJ, leaders of the largest aluminum producer in the US, Century Aluminum Co, have already said they expect a decline in share earnings in the third quarter of 2018.

On March 23, Trump fulfilled a campaign promise and imposed a 25% tariff on steel imports and a 10% tariff on aluminum. In addition, in April 2018, the US introduced sanctions against 38 Russian entrepreneurs and companies, including the aluminum company Rusal.

This comes as a wider campaign of Trump declaring an economic war against the world, not only against foes like Russia, but including major trading partners like China and NATO allies like Turkey. This increasingly aggressive economic policy means that states are now finding methods to free themselves from the US dollar by trading in local currencies, establishing cryptocurrencies and by purchasing more gold to protect themselves from any destruction of the US dollar or sanctions.

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