U.S., Canada square off on aluminum trade

CLYDE, Ohio—Despite a relatively new trade deal covering North America, the U.S. and Canada are bickering over aluminum traveling across the border.

The U.S., effective Aug. 16, has re-imposed a 10-percent tariff on Canadian aluminum entering the country after alleging that country is dumping material. But Canada, calling the move unwarranted, has vowed to place its own set of import taxes on U.S. goods.

The move by the Trump administration could have wide-ranging impact, particularly in the automotive sector, where aluminum is a common component.

Trump is arguing the influx of cheaper aluminum from Canada is putting American jobs at risk and endangers the county's ability to maintain its manufacturing base.

"Canada was taking advantage of us, as usual," the president said during a speech at a Whirlpool Corp. dishwasher plant in Clyde. "The aluminum business was being decimated by Canada. Very unfair to our jobs and our great aluminum workers."

Canada scoffed at the idea that the country's aluminum exports are harming the U.S.

"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," Canadian Deputy Prime Minister Chrystia Freeland said.

The U.S. originally decided to place a 10-percent tariff on all imported aluminum in March 2018, but allowed for discussion with countries that share a national security relationship to address the issue. After talks with Canada, the U.S. agreed in 2019 to exclude Canada from the tariff.

The expectation at the time was that aluminum import volumes would remain at "historical levels without meaningful increases, thus permitting the domestic capacity utilization to remain reasonably commensurate with the target level," Trump said in an August proclamation putting the back tariff in place for Canada.

U.S. Trade Representative Robert Lighthizer's office said aluminum exports from Canada have surged into the United States in recent months.

"Since the president exempted Canada, imports from Canada of the product that accounts for the largest share of Canada's aluminum exports into the United States have surged above historical levels. The surge has intensified in recent months, despite a contraction in U.S. demand," the office said in a statement.

The trade difficulties surrounding aluminum come only weeks after the U.S.-Mexico-Canada Agreement became effective July 1. This is the successor to the North American Free Trade Agreement, which had a quarter-century run governing trade between the three 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," Freeland said.

Canada is set to impose tariffs on U.S. goods starting Sept. 16. Those tariffs, on aluminum and aluminum-containing products, represent "a proportionate amount of Canadian aluminum products affected by the U.S. tariffs."

"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 said.

Prime Minister Justin Trudeau, in July, said tariffs would put extra stress during already difficult financial times.

"This is something, again, (that is) a little bit difficult to understand because the U.S. relies heavily on imports of Canadian aluminum in particular," he said at the time before Trump enacted the tariffs. "The U.S. doesn't make nearly enough aluminum to cover its needs."

The U.S. Chamber of Commerce immediately came out against the tariffs.

"These tariffs will raise costs for American manufacturers, are opposed by most U.S. aluminum producers, and will draw retaliation against U.S. exports—just as they did before. We urge the administration to reconsider this move," Executive Vice President Myron Brilliant said in a statement. "The administration's move to re-impose tariffs on aluminum from Canada is a step in the wrong direction."

But Century Aluminum, the largest producer of primary aluminum in the U.S., came out in support of the move. The Chicago-based company said exports of unalloyed primary aluminum had increased by 95 percent from Canada into the U.S. during the past year.

"President Trump's action demonstrates this administration's continued dedication to restoring the U.S. aluminum industry and America jobs," Century Aluminum CEO Michael Bless said.

But the Aluminum Association, a trade group representing companies in that industry, had come out in strong opposition to the tariffs, indicating 97 percent of U.S. aluminum-related jobs depend on a mix of domestic and imported primary metal.

The association also pushed back against the idea that there is a surge of primary aluminum imports from Canada, claiming levels have been "largely consistent with historic trends and market fundamentals."

A letter to Lighthizer opposing the tariffs was signed by 15 CEOs in the aluminum sector.

"The U.S. aluminum industry needs a reliable source of input aluminum material to manufacture semi-fabricated products like aluminum foil, sheet, plate, wire, extrusions and other products. Even at full capacity, U.S. primary aluminum smelters can only meet about one-third of the demand for this vital material," the letter states.