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Tariffs on aluminum would be punitive to both US and Canada

Pittsburgh — Canadian Prime Minister Justin Trudeau said June 29 US tariffs against imports of Canadian aluminum would ultimately hurt US manufacturers, citing recent reports that the Trump administration may reimpose the tariffs on Canada as early as July 1.

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"We have heard the musings and proposals from the United States that perhaps there needs to be more tariffs on aluminum," Trudeau said during a press conference with reporters. "What we simply highlight is the United States needs Canadian aluminum."

Trudeau said the US does not produce enough primary aluminum to meet its domestic demand.

"If they put tariffs on Canadian aluminum, they are simply increasing the costs of necessary inputs to their manufacturing base which will hurt the American economy," he said. "Again, we see that our economies are so interlinked that punitive actions by the United States administration end up hurting Americans the same way they end up hurting Canadians."

Trudeau's comments regarding the US industry and Canadian aluminum echo similar statements from the US-based Aluminum Association.

"Even at full capacity, US primary aluminum smelters can only meet about one-third of the demand for this vital material," the association said June 25 in a letter to US Trade Representative Robert Lighthizer. "The aluminum industry has no choice but to import a significant amount of primary aluminum to meet demand."

The Trump administration placed 10% tariffs on primary aluminum imports, along with 25% tariffs on steel imports, in 2018. Canada and Mexico were granted exemptions from the tariffs in 2019.

However, the American Primary Aluminum Association has called for the tariffs to again be placed on Canada.

"Since the 10% tariff on Canadian aluminum imports was lifted, Canadian product has surged into the US causing the domestic price of aluminum to fall, capacity to stall and workers to be laid off," APAA CEO Mark Duffy recently told S&P Global Platts.

Conversely, the Aluminum Association has argued that current aluminum import trends from Canada are consistent with pre-tariff levels.

"While it is true that imports of Canadian metal have increased, import volumes today are similar to 2017, prior to the implementation of Section 232 tariffs and the year that most closely resembles current US production levels," the Aluminum Association said in a statement June 9.

The Aluminum Association said the July 2019 restart of the Aluminerie de Becancour aluminum smelter in Quebec after the resolution of a labor dispute was responsible for any increase in imports, rather than the tariff exemption.

US groups oppose potential aluminum tariff on Canada

Several US-based industry groups have argued against the potential aluminum import tariff reinstatement on Canada, according to statements released June 26.

"Reports that new US tariffs will be imposed on Canadian aluminum exports, in the very week that a new North American trade deal takes effect, make a mockery of the agreement, threaten thousands of Canadian jobs and ignore the real problem facing the industry," the United Steelworkers union said.

The Coalition of American Metal Manufacturers and Users said the prospect of new tariffs on Canadian aluminum would hurt manufacturers recovering from the coronavirus pandemic.

"Tariffs are taxes, and the last thing that US manufacturers need is for the government to tax an important input like aluminum while these companies are dealing with unprecedented challenges resulting from the COVID-19 pandemic," CAMMU said. "Manufacturing is the backbone of the US economy, and raising costs on aluminum-using manufacturers will result in lost jobs and a slower recovery."

US industry groups with interests in aluminum can manufacturing also sent a letter to Lighthizer to express concerns regarding the tariff on Canada.

"The US has imported more primary aluminum from Canada than from any other country for decades, and a large percentage of those imports are for the benefit of the US aluminum industry itself," the letter said. "Those imports are also critical to many US companies that are important to our economy overall."

The letter was signed by the Aluminum Association, the Beer Institute, the Can Manufacturers Institute and the American Beverage Association.