Trump Reinstates Tariff on Canadian Aluminum

08/08/2020 12:00 - 28 total view

The tariff, which prompted dollar-for-dollar retaliation from Canada, was imposed just one month after a new trade deal between the two countries went into effect.

President Trump announced Thursday that he was reimposing a 10 percent tariff on Canadian aluminum to help struggling American producers, a step that is likely to incite retaliation and worsen ties with Canada just one month after the countries’ new trade deal went into effect.

Speaking at a Whirlpool factory in Clyde, Ohio, Mr. Trump said that he had signed a proclamation earlier on Thursday that would reimpose the levy on Canada, accusing the country of “taking advantage of us as usual.”

“To be a strong nation, America must be a manufacturing nation and not be led by a bunch of fools,” the president said. “That means protecting our national industrial base.”

Mr. Trump imposed tariffs on steel and aluminum from Canada, Mexico and the European Union in early 2018, prompting those countries to respond with their own tariffs on American goods. The levies on imports from Canada and Mexico were not lifted until the following year, when the countries reached an agreement as part of the negotiations toward a new North American trade deal.

But the United States retained the right to reinstate them if it observed a spike in metal imports, which Mr. Trump cited on Thursday.

“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,” Mr. Trump said Thursday. “Canadian aluminum producers have broken that commitment.”

On Thursday evening, Prime Minister Justin Trudeau announced Canada’s response via Twitter. “In response to the American tariffs announced today, Canada will impose countermeasures that will include dollar-for-dollar retaliatory tariffs,” he wrote. “We will always stand up for our aluminum workers. We did so in 2018 and we will stand up for them again now.”
The deputy prime minister, Chrystia Freeland, issued a pointed statement, as well. “In the time of a global pandemic and an economic crisis,” Ms. Freeland said, “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.”

She also rejected Mr. Trump’s national security justification for the measure. “Canadian aluminum strengthens U.S. national security and has done so for decades through unparalleled cooperation between our two countries,” she said in the statement.
For months, American and Canadian officials have debated whether Canada’s rising imports violate that agreement or constitute a surge. Imports of Canadian aluminum have risen since the tariffs were lifted last year, but they remain below levels seen within the last few years.

The American aluminum industry has struggled to compete in recent years with producers in countries like China, Russia, Iceland, the United Arab Emirates and Canada that offer generous state subsidies or benefit from cheap electricity. Today, only a handful of American aluminum smelters, which make raw aluminum out of bauxite, still operate.
Supporters of the tariffs say that they have helped to revive American production, but that imports from Canada and the economic slump that accompanied the pandemic had once again thrown the industry into disarray. In April, the aluminum giant Alcoa idled a smelter in Ferndale, Wash., saying that production there was “uncompetitive.”

Two American companies with domestic aluminum capacity, Century Aluminum and Magnitude 7 Metals, have lobbied intensely for the tariffs to be reimposed. In a statement Thursday, Michael Bless, the chief executive of Century Aluminum, said the move “demonstrates this administration’s continued dedication to restoring the U.S. aluminum industry” and “helps to secure continued domestic production of this vital strategic material.”

But the rest of the aluminum industry, which has operations spread around the globe, including in Canada, has fought against the measure. The multitude of industries that use aluminum to make products including cars, beer cans and washing machines, have also argued against the levies, saying they increase their costs and make their products less competitive globally. Even Whirlpool, the appliance maker where Mr. Trump made his announcement on Thursday, has seen its costs for raw materials rise as a result of the metal levies.

In June, executives from more than 15 of the world’s largest aluminum companies, including Alcoa, Constellium and Novelis, sent a letter to the Trump administration arguing against the tariffs.

“Fully 97 percent of U.S. aluminum industry jobs are in mid-and-downstream production and processing,” the letter read.

“These jobs depend on a mix of domestic and imported primary aluminum, including from countries like Canada.”