US reinstates tariffs on Canadian aluminum imports

President Trump announced Thursday, Aug. 6, that he had signed a proclamation reimposing Section 232 tariffs on aluminum imports from Canada during a visit to a Whirlpool plant in Ohio. “Canada was taking advantage of us, as usual,” Trump said during a speech in Ohio.

“Several months ago, my administration agreed to lift those tariffs in return for a promise from the Canadian government that its aluminum industry would not flood our country with exports and kill all our aluminum jobs, which is exactly what they did,” he said. “Canadian aluminum producers have broken that commitment, and the U.S. Trade Representative Robert Lighthizer has advised me that this step to reimpose tariffs is absolutely necessary to defend our aluminum industry."

Tom Dobbins, president and CEO of the Aluminum Association, Washington, which represents U.S. and foreign-based primary producers of aluminum, aluminum recyclers and producers of fabricated products and industry suppliers, issued a statement responding to the decision to reimpose the tariffs on nonalloyed unwrought, or P1020, aluminum from Canada:

“We’re incredibly disappointed that the administration failed to listen to the vast majority of domestic aluminum companies and users by reinstating Section 232 tariffs on Canadian aluminum. After years of complex negotiations and hard work by government, industry and other leaders across North America to make the U.S.-Mexico-Canada Agreement (USMCA) a reality, this ill-advised action on a key trading partner undermines the deal’s benefits at a time when U.S. businesses and consumers can least afford it.”

Dobbins adds that while the association understands the action is meant to help the domestic aluminum industry, “the volatility of implementing, removing and then reimposing trade barriers threatens U.S. growth and investment at a time when domestic demand is already down nearly 25 percent year to date.” He says assessing tariffs on Canadian aluminum imports fails to address “the underlying issue of China’s overcapacity and makes U.S. aluminum companies less competitive when trying to sell their goods to industrial customers across North America.”

Dobbins continues, “As the Aluminum Association has extensively documented, reports of a ‘surge’ of primary aluminum imports from Canada are grossly exaggerated. Data released just yesterday by the U.S. Census Bureau showed that overall primary aluminum imports from the U.S. to Canada declined about 2.6 percent from May to June and are below levels seen as recently as 2017. The few companies that stand to benefit from reinstated 232 tariffs on aluminum have cherry-picked government data and omitted important context to build their case, which unfortunately won the day.

“The Aluminum Association will continue to monitor trade flows and advocate for the removal of Section 232 aluminum tariffs on all market economy countries. The industry strongly favors continued targeted trade enforcement that addresses the real problem in the market today—massive Chinese metal subsidies that drive massive overcapacity," he adds.

According to the Aluminum Association, despite targeted trade enforcement activity, including antidumping and countervailing duty cases, that has reduced imports of Chinese aluminum into the U.S. in recent years, China’s subsidy-driven overcapacity continues to grow. The association says China’s aluminum overcapacity has grown by 60 percent throughout the last five years, with that production increasingly being exported to third-party countries, further distorting global markets. “In fact, according to recent figures from the National Bureau of Statistics (NBS), smelters in China produced 3.02 million tons of primary aluminum, the highest ever June amount,” the association notes, with total output up 1.7 percent year to date. The association cites research by Beijing-based Antaike, which claims that Chinese producers have brought an additional 680,000 tons per year of new aluminum production capacity online in the first six months of 2020, despite the overcapacity that already exists. This additional capacity is equal to nearly 40 percent of total U.S. aluminum smelting capacity, according to the Aluminum Association.

In response to the reintroduction of tariffs on Canadian aluminum, that country’s Deputy Prime Minister Chrystia Freeland says Canada “intends to swiftly impose dollar-for-dollar countermeasures,” adding that the actions on the part of the Trump administration are “unwarranted and unacceptable.”

She continues, “Canadian aluminum does not undermine U.S. national security. Canadian aluminum strengthens U.S. national security and has done so for decades through unparalleled cooperation between our two countries. Canada is a reliable supplier of aluminum for American value-added manufacturers. Aluminum trade between Canada and the U.S. has long been mutually beneficial economically for both countries, making the North American aluminum industry as a whole more competitive around the world.

“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,” Freeland says.