If the Trump administration buys the argument that Canadian aluminum exports have surged and slaps a ten per cent tariff back on products imported from Canada, the move could end up hurting Americans instead, warns the head of the association representing Canada’s aluminum producers.
If the Trump administration buys the argument that Canadian aluminum exports have surged and slaps a 10 per cent tariff back on products imported from Canada, the move could end up hurting Americans instead, warns the head of the association representing Canada’s aluminum producers.
“Canada stands to win more in a situation like this,” said Jean Simard, the president and CEO of the Aluminum Association of Canada.
“Production will keep going on, exports will keep going on, and at the end, unfortunately, it’s the U.S. economy that will bear the brunt of this increase in tariffs.”
The damage, Simard said, will be more on the political side, given how much political capital the Trudeau government spent on persuading the U.S. government to lift steel and aluminum tariffs in May 2019.
Last week, U.S. Trade Representative Robert Lighthizer fuelled D.C. rumours of a possible return to tariffs by telling the Senate Finance Committee that a recent spike in imports is a “genuine concern.”
Followers of Canada’s long-running battle with the U.S. softwood lumber industry have seen this drama play out before.
As with softwood, the U.S. needs imported aluminum to meet its domestic demand.
Tariffs or no tariffs, the U.S. consumes up to six million tonnes of aluminum every year. But its struggling domestic industry produces only 800,000 tonnes of that.
These bandits would tax their own military to buy the votes of morons …– Flavio Volpe, Automotive Parts Manufacturers Association
Now, some players in the U.S. aluminum industry (but not all of them) are leveraging their political influence to gain a price advantage over foreign competition.
Why does this lobbying work? Well, there’s an election coming in November. And the Trump administration draws a straight line between protecting jobs and winning votes.
How the ‘snap back’ works
When the previous round of American steel and aluminum tariffs ended, the joint statement issued by Canada and the U.S. laid out conditions under which tariffs could “snap back,” or re-apply.
“In the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time,” the statement said (without defining a “meaningful surge” or what that time comparison should be), “with consideration of market share” (again, this ideal share is undefined) “the importing country may request consultations with the exporting country.”
A formal consultation process hasn’t been publicly requested, agreed to or even disclosed. The Canadian side says regular conversations with the Americans about monitoring aluminum shipments have been underway for several weeks; one such conversation involved Canada’s ambassador in Washington last Friday.
“After such consultations, the importing party may impose duties of 25 per cent for steel and 10 per cent for aluminum in respect to the individual product(s) where the surge took place,” the 2019 statement continued. “If the importing party takes such action, the exporting country agrees to retaliate only in the affected sector.”
In other words, no politically-damaging C