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Aluminum industry awaits clarity on USTR's import levels following tariff removal

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Aluminum industry awaits clarity on USTR's import levels following tariff removal


Aluminum Association says levels are below historical import volumes

Canadian officials deny quotas have been agreed upon with the US

Pittsburgh — While many industry groups praised the US' recent removal of the reimposed 10% tariff on aluminum imports from Canada, confusion remained surrounding the import volume levels set forth by the United States Trade Representative's office in place of the tariff.

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The Aluminum Association said Sept. 18 it supported tariff- and quota-free trade within North America and was reaching out to the USTR to clarify details regarding the import target levels.

"These 'expected' levels are considerably below historical import levels of this product," the association said in a newsletter to subscribers. "It remains unclear exactly how this system might be implemented or enforced, and Canada has indicated that it did not agree to any import controls or quotas."

The USTR said it expects shipments of non-alloyed, unwrought aluminum from Canada to be no greater than 83,000 mt for September, 70,000 mt for October, 83,000 mt for November and 70,000 mt for December, according to a statement Sept. 15.

"If actual shipments exceed 105% of the expected volume for any month during the four-month period, then the United States will impose the 10% tariff retroactively on all shipments made in that month," USTR said.

The USTR's monthly levels are well below the corresponding 2019 volumes of non-alloyed, unwrought aluminum imports from Canada under HTS code 7601.10. Shipments in 2019 totaled 139,220 mt in September, 134,041 mt in October, 107,115 mt in November and 159,959 mt in December, according to data from the US International Trade Commission.

However, the expected 2020 levels are comparable with 2018 import numbers for the respective months.

During a press conference Sept. 15, Canada's deputy prime minister, Chrystia Freeland, said a quota system was not discussed between the US and Canada as part of the decision to lift the aluminum tariffs.

"We have not agreed to anything and we have not negotiated an agreement with the US on quotas," Freeland said. "What has happened is that the US has chosen to unilaterally lift its tariffs on Canadian aluminum exports to the United States."

Aluminium Association of Canada CEO Jean Simard said the decision to both reinstate and abolish the tariffs were politically motivated and suggested that quotas should not be used to replace the tariffs.

"Those quotas that the US sets for itself, we're not going to play that game," Simard said in an interview with the Financial Post.

Following the announcement that the tariff would be removed, the Platts P1020 aluminum transaction premium, delivered Midwest, dropped Sept. 15 to 14.20 cents/lb plus London Metal Exchange cash from 15.20 cents/lb on Sept. 14. The price slipped to 13.7 cents/lb Sept. 17.

The premium reached a 2020 high of 15.25 cents/lb Aug. 18 after the reinstated tariff took effect Aug. 16.