US drops tax on Canada aluminum, heading off retaliation

The Trump administration said that it is dropping taxes on Canadian aluminum, easing tensions with a close ally just hours before Canada was prepared to impose retaliatory sanctions.

The Office of the US Trade Representative said the US is ending the 10% tariffs a month after imposing them. The US had charged last month that an influx of Canadian aluminum justified the levy.

But the office said Tuesday that shipments of Canadian aluminum are returning to normal levels. It said it could reimpose the tariffs again.

Canada was preparing to impose retaliatory tariffs on US products Tuesday.

Mary Ng, Canada’s minister of International Trade, welcomed the change in the US position.

“Canada has not conceded anything,” Ng said.

Deputy Prime Minister Chrystia Freeland said Canada is prepared to impose retaliatory measures if the tariff is reimposed. She said it was not a negotiated

if the imports surged deal with the United States.

“At a time when we all focused on recovering from the COVID recession and keeping the virus under the control we all know that the last thing we need is tariffs,” Freeland said. “Common sense has prevailed.” A senior Canadian government official, who spoke on condition of anonymity, also said that Canada had made no concessions. “Their statement has all sorts of language about what they expect from Canada, but it’s important to note Canada has agreed to none of that,” said the official said, who was not authorized to speak publicly on the matter.

The official added that, “We’re glad the US lifted tariffs – that’s a victory for Canada and the US.”

Trump originally imposed the tariffs on aluminum imports from most countries in 2018. He then lifted them last year on Canadian and Mexican metals to smooth the way for the US-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement. The USMCA took effect July 1 and was expected to bring stability to North American trade.

Instead, Trump declared in August that he would reimpose the tariffs on Canada. The reinstated tariffs took effect, temporarily as it turned out, on Aug.16.

The tariffs drew widespread criticism. US business groups said the taxes raised costs for manufacturers that depend on imported aluminum, while not addressing the real threat to American aluminum producers: massive overproduction by China that drives prices down. (AP)