Canada fires back with $3.6B in tariffs on U.S. aluminum
Country to target certain items following Trump’s reimposement of 10% duties
The Trudeau government will respond to U.S. President Donald Trump’s move to again slap tariffs on Canadian aluminum by firing back with $3.6 billion in tariffs of its own, Deputy Prime Minister Chrystia Freeland said Friday.
Freeland said during a press conference that the federal government will hold consultations with consumers and businesses for 30 days on a broad list of products from the United States containing aluminum, after which Canada will impose tariffs on certain items from that list.
“The final tariffs that we impose will be … perfectly reciprocal, dollar-for-dollar, and the total amount will be $3.6 billion,” Freeland told reporters.
Canada’s decision follows the Trump administration’s announcement on Thursday that the U.S., due to supposed national security concerns, would reimpose a 10-percent tariff on certain Canadian aluminum imports starting Aug. 16.
Trump imposed a similar-sized import tax on Canadian aluminum in 2018, which was coupled with a 25-per-cent tariff on Canadian steel. This prompted the Canadian government to bring in retaliatory tariffs on up to $16.6 billion in U.S. imports. The Canadian government and the White House ultimately agreed to remove the added taxes in 2019, defusing the trade fight.
However, during a speech at a Whirlpool Corp. factory in Ohio on Thursday, Trump claimed Canada had since flooded the U.S. with aluminum, decimating his country’s industry.
The Canadian government fired back that the country’s aluminum does not undermine U.S. national security and warned that it would respond in kind to the tariffs.
Canada has particularly taken issue with the fact that the tariffs are coming during an economic crisis caused by the coronavirus pandemic. The federal government has further claimed the move will hurt American consumers, with
Freeland noting their “retaliation list” included washing machines, which Whirlpool makes.
“We will not escalate and we will not back down,” the deputy prime minister said Friday.
The return of aluminum tariffs has also prompted questions about whether the latest trade tiff between Canada and the U.S. could spread to the steel business.
Asked about the possibility of steel tariffs on Friday, Freeland told reporters it was a question for the White House.
“My policy with this U.S. administration is hope for the best, prepare for the worst,” she added.
According to the Aluminium Association of Canada, its industry supports more than 8,700 jobs and generates $8.3 billion in exports. The Canadian Steel Producers Association says theirs is a $15-billion industry that directly employs about 23,000 workers.
CSPA president Catherine Cobden told the Financial Post on Friday that tariffs were unwarranted for both the Canadian aluminum and steel industries, the latter of which has seen shipments to the U.S. decline 46 per cent or more since COVID-19 struck.
“Along with the U.S. industry, we’re really back on our heels with this virus,” Cobden said in an interview. “There is no way that anyone could interpret what’s going on as a surge of steel into the U.S.”
Trump’s latest move also follows the coming into force on July 1 of the “new NAFTA” between Canada, the U.S. and Mexico, which was seen as a way to help North America bounce back from the pandemic.
The Aluminium Association of Canada said Thursday it was “very disappointed” by the new tariffs coming on the heels of the new trade deal. Moreover, the group said exports of primary aluminum from Canada into the U.S. actually declined by around 2.6 per cent from May to June.
“This measure is likely to punish U.S. consumers more than any other group, and is bound to reward aluminum exporters in other countries like Russia and China, more than U.S. producers,” Bank of Montreal chief economist Douglas Porter wrote in a note published Friday.
Meanwhile, there is something of a lopsided split in the U.S. aluminum industry regarding the tariffs.
The Trump administration had been nudged by the American Primary Aluminum Association — which represents just two companies, one of which is backed by Switzerland-headquartered Glencore Plc — to restore the tariffs on Canadian imports.
Another group that represents dozens of companies, the Aluminum Association, has argued against the tariffs. Like its Canadian counterpart, the group has disputed that there has been a surge of Canadian aluminum into the U.S.
“We’re incredibly disappointed that the administration failed to listen to the vast majority of domestic aluminum companies and users by reinstating Section 232 tariffs on Canadian aluminum,” Tom Dobbins, president and CEO of the Aluminum Association, said in a statement.
The Ontario government has also voiced displeasure with Trump’s announcement, saying the province exported around $2.4 billion of aluminum and aluminum products to the U.S. in 2019, while importing close to the same amount.
Ontario Premier Doug Ford echoed Freeland’s criticisms of the U.S. president. The two spoke early Friday about the tariffs. Freeland said she thanked Ford for his support and his friendship.
Ford encouraged Canadians to buy made-in-canada products over U.s.-made ones to remind Trump that Canadians are Americans’ biggest international customers.
“Who does this?” Ford said incredulously. “In times like this, who tries to go after your closest ally, your closest trading partner, your number 1 customer ...?”
This measure is likely to punish U.S. consumers more than any other group, and is bound to reward aluminum exporters in other countries.