Alcoa was supposed to benefit, but tariffs are prompting it to seek an exemption.
Canadian imports leave metals giant facing higher costs
Alcoa would seem to be in prime position to benefit from President Donald Trump’s aluminum tariffs. The 130-year-old American aluminum producer has in recent years faced stiff competition from overseas.
But on Monday, Alcoa asked the administration for an exemption from the 10 percent tariffs. The reason: The company imports much of its aluminum from its facilities in Canada, which is among the nations subject to Trump’s metals tariffs.
The Commerce Department imposed tariffs on steel and aluminum earlier this year, saying that imports of foreign metals were degrading the “industrial base” and threatened national security. That move was supposed to help U.S. metal manufacturers, like U.S. Steel and Century Aluminum.
But Alcoa’s request underscores the risk the Trump administration faces as it tries to protect U.S. companies by erecting trade barriers. While the tariffs help some companies, they have the potential to hurt thousands of others. Businesses that rely on foreign materials are facing increased costs, while others that depend on access to overseas markets are being hit with retaliatory tariffs from countries like Canada, Mexico and the European Union.
Alcoa last month said the aluminum tariffs would likely add $100 million in costs this year, a disclosure that contributed to a sharp decline in the company’s stock.
Other big companies, including Harley-Davidson, Whirlpool and Caterpillar, in recent weeks have detailed the extra costs to their businesses caused by the Trump administration’s tariffs. Coca-Cola last month said it was increasing the cost of some of its products to reflect higher metals costs. And the financial hits from the levies could escalate in the coming months.
The Trump administration is threatening to impose tariffs on imports of cars and car parts and could impose tariffs on $200 billion worth of goods from China.
After the aluminum tariffs were proposed, Alcoa asked that they not be imposed on Canada and other countries with which the United States has generally had good trading relations.
In its request, Alcoa said it imports aluminum from its Canadian operations for further production at its Warrick facility, near Evansville, Ind., which employs around 1,600 people. Alcoa’s customers then use the aluminum from that plant to make food and beverage cans.
Alcoa said it cannot get the type of aluminum it needs in sufficient quantities from its own facilities in the United States or from other U.S. producers. Even if America’s dormant aluminum plants were revived, the United States would still be dependent on imports, mostly from Canada, said Tim Reyes, president of Alcoa Aluminum, in a statement.