Canada Protests US Tariffs on Aluminum

Just weeks after the updated USMCA went into effect, the Trump administration announced that it would slap tariffs on Canadian aluminum back in place, Bloomberg reported. “President Trump announced that he is removing Canada’s exemption from 10 percent tariffs, effective Aug. 16, after US Trade Representative Robert Lighthizer expressed concern about recent struggles by American aluminum producers,” the news outlet noted.

The decision has raised concerns in Canada. For example, the Aluminium Association of Canada (AAC), a non-profit organization representing aluminum producers Alcoa, Alouette and Rio Tinto, released a communication statement expressing “great disappointment that the US has levied new tariffs on Canadian aluminum.”

“We were already seeing a rebalancing in product mix from basic commodity ingot back to value added product through the recovery of the automotive industry. There is no surge for 2020 over 2019. Monthly anomalies do not make for a yearly surge: they are simply the results of changing market dynamics in crisis times,” remarked Jean Simard, President and CEO of AAC.

The association highlighted that exports of primary aluminum from Canada to the US declined by about 2.6 percent from May to June. Primary aluminum import volumes from Canada for the first six months of 2020 were nearly 5 percent lower than in the same period in 2017, it added.

The AAC stressed that Canadian aluminum has been a key competitive advantage for US manufacturers since the beginning of the 20th century and is recognized in US law as a contribution to the nation's defense. It is also an important component of the US’ industrial base. While the US produces no more than 1 million metric tons a year of primary metal, it consumes six times that amount. Tariffs only raise costs for US consumers and businesses in the middle of economic recovery efforts, the AAC cautioned.

The AAC called Ottawa to consider “all options for retaliation,” given that there is no surge in aluminum exports from Canada to the US. Moreover, the AAC said the tariff goes against the spirit of both the Joint Statement of May 17, 2019, and the overarching USMCA. “At a time when we should work together to jump-start our economies by strengthening our supply chains, here we are playing into the hands of Russia and China. This move will not only benefit foreign traders but will increasingly substitute Canadian metal with metal from Russia without addressing the real problem: China,” stated Simard. “Year in and year out, Canada has been the most reliable source of primary aluminum for the US, providing low carbon, responsibly-produced metal at world prices. This US focus on Canada only distracts from the real problem facing the aluminum industry: unfairly subsidized Chinese aluminum production leading to global overcapacity,” he concluded.