INTERVIEW: US tariffs on Canada ‘defy all logic’ - Aluminium Association of Canada

New US tariffs on Canadian aluminum are far more damaging to the US than to Canada since Canada's metal supply is 'existential' to the US aluminum industry, Jean Simard, president and CEO, of the Aluminium Association of Canada, said in a March 4 interview with Platts, part of S&P Global Commodity Insights.

The Aluminium Association of Canada is a non-profit trade group representing Canada's three primary aluminum producers: Alcoa, Rio Tinto, and Aluminerie Alouette. Simard said US tariffs could put hundreds of thousands of US jobs at risk, while incentivizing Canadian producers to redirect their aluminum supply away from the US and into European markets.

Platts: What are your general impressions of the tariffs placed on Canadian aluminum on March 4?

Jean Simard: Well, it's counterintuitive to see that tariffs are put in place in an industry where about 9,000 Canadian workers produce metal that is then exported to the US where 700,000 good American manufacturing jobs are handling that metal to create value in the US. And this is just destroying those jobs progressively through time.

We are seeing 10% tariffs on Canadian aluminum now, and there is the 25% tariff coming next week. That would be a combined 35% rate on Canadian aluminum. That's very damaging. US consumers will end up with higher costs for the cars, electric appliances, and other products they're buying.

Platts: Canada has already started retaliatory tariffs on the US; what is AAC's position on this?

Simard: It certainly is necessary for Canada to have a very firm stand in terms of retaliation. This is what we had to do to get out of the tariffs back in 2019. So, we firmly support Canada's position and additional tariffs will be announced as we move through the next layer of announcements. It will just put more pressure on US companies and on US elected officials to voice their concerns and the fact that they don't support this because it's destroying US jobs.

There are nontariff tools that will be used, and there's a whole arsenal of measures that will be put to task should the need arise. Unfortunately, it's an escalatory situation, but it's the only way to be heard, while at the same time, keeping the discussion going between Canadian and U.S. representatives to find a way out of this.

Platts: How will the aluminum tariffs on Canada impact Canadian aluminum operations?

Simard: We are going to keep producing. We're not going to lose jobs from this. We're not going to curtail production. Should the U.S. market become less interesting, financially and in terms of a long-term business relationship, we have the optionality of shifting our products progressively to the European market, which is also a deficit market and one that values low carbon aluminum, which is what we produce.

Let's look at numbers very fundamentally. We provide the US with about 2.7 million mt of aluminum a year. The US consumes about 5 million mt, out of which it produces about 670,000 mt. So, as the [Aluminum Association, a US-based trade group] said very publicly back in the fall, Canada's metal is existential to the US industry.

Platts: What is your view on building this trading relationship with Europe? Do you see it as attractive or is it better to resolve things with the US?

Simard: It's a very good question. It's the question of the hour. We've been dedicated over the past decade to supply the US market. And we've done it in a very professional and very world-class way. Before we leave that market, we will have to certainly ensure that what lies ahead of us in the European market has long-term value. But as the tariffs remain, you will certainly see some metal going to Europe because the price signal will become more interesting in Europe and less interesting in the US.

We are certainly able to do it. Our smelters are almost all seaborne. They have access to the Atlantic Ocean and to the European market. So logistically, it can be done, but it would be counterintuitive at the end of the day to eventually find ourselves in a total metal flow shift, where Canada metal would go to Europe and Middle East metal would replace our metal to serve the US. It's ridiculous, but it could happen.

Platts: President Trump gave tariff exemptions for Canadian aluminum back in 2019. How likely do you think it is that those exemptions will happen again?

Simard: The situation that we have in front of us, in my book, defies all logic -- so I'm not even sure how to answer your question because everything that I read, everything that I see goes against the logic of markets and the economy. So it's very hard to say, based on past experience, that this is just a remake of the past. We're in a different world with different players