US reinstates 10% tariff on certain Canadian aluminium imports

US reinstates 10% tariff on certain Canadian aluminium imports

The Trump administration will reimpose tariffs on certain aluminium imports from Canada, escalating trade tensions just weeks after a new trade agreement between the US, Canada and Mexico went into effect. 

President Donald Trump on Thursday said he would put tariffs of 10 per cent on unalloyed and unwrought Canadian aluminium, citing threats to US security.

In 2018, the US levied a 25 per cent tariff on steel and a 10 per cent tariff on aluminium from Canada and another countries, claiming that the imports posed a national security threat.

The move fuelled a significant escalation of trade tensions with some of Washington’s closest allies, and prompted retaliatory Canadian duties on C$16.6bn (US$12.2bn) worth of US goods. Tariffs on Canada and Mexico were removed last May as part of the negotiations that resulted in the USMCA trade deal, which replaced Nafta. 

Under USMCA, the US has the right to reimpose tariffs if “surges” of exports in steel and aluminium to the US occur. 

In a statement on Thursday, the US trade representative’s office said Canadian aluminium exports into the US had “surged above historical levels”.

Chrystia Freeland, Canadian deputy prime minister, said the tariffs were “unwarranted and unacceptable”, and that Canada intended to “swiftly impose dollar-for-dollar countermeasures”.

“Canadian aluminium does not undermine US national security,” Ms Freeland said. “Canadian aluminium strengthens US national security and has done so for decades through unparalleled co-operation between our two countries.”

She added: “In the time of a global pandemic and an economic crisis, the last thing Canadian and American workers need is new tariffs that will raise costs for manufacturers and consumers, impede the free flow of trade, and hurt provincial and state economies.”

The US Chamber of Commerce, a business group, said the reimposition of tariffs against Canada was “a step in the wrong direction”. 

“These tariffs will raise costs for American manufacturers, are opposed by most US aluminium producers, and will draw retaliation against US exports — just as they did before,” said Myron Brilliant, the group’s head of international affairs. “We urge the administration to reconsider this move.”

The Aluminum Association, which represents the majority of US and foreign companies in the industry — including those that take the input metal and process it into sheet, foil and plate form — last month wrote to trade representative Robert Lighthizer to outline their need for a reliable source of raw aluminium. 

The signatories of that letter also pointed out that while Canadian exports of raw aluminium to the US have increased since the tariffs were removed, volumes are at a similar level to 2017, and in keeping with the historical trend.

The large amount of power required to transform aluminium’s key ingredient, alumina, into refined metal has led most companies to anchor their production of raw aluminium in countries such as Canada, Iceland or Russia, where there is an ample energy supply. China, which subsidies its industry, is also a big producer.