Trump imposing new aluminum tariff, Canada readies countermeasures

By | August 6, 2020

OTTAWA — Canada is planning to retaliate with countermeasures after U.S. President Donald Trump announced his plans to impose a 10-per-cent tariff on Canadian aluminum imports, despite condemnation from aluminum organizations on both sides of the border.

“In response to the American tariffs, Canada intends to swiftly impose dollar-for-dollar countermeasures,” said Deputy Prime Minister Chrystia Freeland in a statement late Thursday, promising more information about the retaliatory measures “shortly.”

The federal government was informed by the U.S. administration that the new tariff was coming, and will apply to unprocessed Canadian aluminum, as of Aug. 16.

Freeland called Trump’s move “unwarranted and unacceptable.” 

In announcing the new trade action at an event in Ohio, Trump said that: “Canada was taking advantage of us, as usual.” 

Trump claimed on Thursday that the American aluminum business has been “decimated” by Canada, calling it “very unfair” and accusing Canadian producers of flooding the U.S. with exports.

He also said that the new tariffs are “absolutely necessary,” and pledged he will “always put American workers first,” and use all tools at his disposal—including tariffs—to do that.

The United States had been considering whether to slap tariffs on aluminum imports coming from Canada, under Section 232 of the U.S. Trade Expansion Act, unless Canada agreed to restrict its export volumes through quotas.

In a tweet, Prime Minister Justin Trudeau vowed to stand up for Canadian workers, echoing Freeland’s commitment to retaliate. 

Responding to the initial threat, Trudeau said that the U.S. “needs Canadian aluminum,” as it does not produce enough to fill its domestic manufacturing needs.

“If they put tariffs on Canadian aluminum, they’re simply increasing the costs of inputs, necessary inputs, to their manufacturing base which will hurt the American economy. 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 said back in June.

INDUSTRY GROUPS ON BOTH SIDES AGAINST

Aluminum association groups on both sides of the Canada-U.S. border are speaking out about Trump’s move, and are in agreement that it’s the wrong approach. 

Aluminum Association of Canada President & CEO Jean Simard told CTV News that Canadian producers are not dumping aluminum—the term for when selling under domestic price—rather that Canada is selling at the current international price.

“There’s no dumping. It’s a misuse of a word that is very well documented in international trade law. This is not dumping. This is quite an assumption by the president,” Simard said.

In a statement, President and CEO of the Aluminum Association Tom Dobbins said his organization— which represents aluminum production and jobs in the United States—is “incredibly disappointed,” and said Trump’s move while trying to help will only add volatility to the industry as a whole. 

“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,” said Dobbins. 

He added that the reports of a surge of imports from Canada are “grossly exaggerated,” citing data released on Wednesday from the U.S. Census Bureau that showed that overall primary aluminum imports from the U.S. to Canada declined about 2.6 percent from May to June and are below 2017 levels.

“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,” he said. 

TRUDEAU ACCUSED OF INACTION  

Reacting to the late-in-the-day news, several Conservative MPs issued a joint statement saying Trudeau has “once again let down” thousands of Canadian aluminum workers.

“The U.S. administration has been foreshadowing new tariffs on Canadian aluminum for weeks, so why didn’t the Trudeau government take action to protect Canadian workers?” reads the joint statement.

“The aluminum sector is vital to the Canadian economy. It’s essential that this industry thrive, especially during COVID-19,” said the Conservative MPs.

In a statement, NDP MP and the party’s international trade critic Daniel Blaikie said his thoughts were with the aluminum workers who will be hurt by Trump’s “electioneering” and the lack of Liberal action at home. He is calling for a federal plan to help protect Canadian aluminum jobs.

Freeland agreed in her statement, that “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.” 

NOT THE FIRST TIME

The Canadian Chamber of Commerce is also condemning the U.S. move., saying the tariffs will “only exacerbate disruptions to North American supply chains.

In a statement the Chamber’s Senior Director of International Trade Mark Agnew said that Canadian aluminum exports pose “absolutely no national security threat” and the move is just as wrong as it was when it was tried by Trump in 2018. 

Trump hit Canada with steel and aluminum tariffs in May 2018, during negotiations for the new NAFTA deal. The tariffs remained in place for a year, during which time Canada reciprocated with dollar-for-dollar countermeasures on American steel, aluminum, as well as levelling a surtax on other goods.

A year later, Canada and the U.S. issued a joint statement announcing a decision to lift the tariffs, confirming that the two nations also agreed to terminate World Trade Organization litigation Canada launched after slamming the U.S. tariffs as “punitive” and “an affront” to Canada-U.S. relations.

The new NAFTA came into effect on July 1, meaning this latest American trade action comes just over a month into the new deal.

The new rules of origin for automobiles within the new NAFTA state that 70 per cent of the steel and aluminum purchased by North American automakers has to be produced in North America.

CALLS TO RETALIATE

The largest private sector union has called on Trudeau to “stand firm” against the prospect of the re-imposition of tariffs and has suggested that Canada should retaliate.

Unifor National President Jerry Dias has previously called the prospective tariffs “totally unwarranted.”

Speaking to the prospect of the tariffs, Unifor National President Jerry Dias has called the prospective tariffs “totally unwarranted.”

Dias has said that the arguments that American steel producers are making to the Trump administration about the need for intervention — including that a surge in Canadian aluminum imports is causing aluminum prices to collapse — are “preposterous and utterly divorced from reality,” because globally, due to COVID-19, demand for metal has gone down and that’s led to the declining prices. 

The Conservatives have also called for immediate retaliation to “send a clear message to the U.S. that we will not restrict our exports,” and industry representatives are calling on Freeland to begin consulting the business community on what the government’s retaliatory response will be.  

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