President Donald Trump could reimpose tariffs on aluminum imports from Canada later this week, a move that would reignite tensions with Ottawa and likely prompt retaliation just days before his signature North American trade deal goes into effect.
The U.S. is pressing for Canada to impose quotas to slow the surge of its exports of the metal, or else it will reimpose a 10 percent tariff on aluminum from Ottawa, multiple people familiar with the issue told POLITICO.
If the Trump administration moves forward with the tariffs, it would come just as the U.S.-Mexico-Canada Agreement enters into force on July 1 — a long-awaited date for officials in all three countries after three years of tense negotiations among the countries and within the U.S. Congress.
Multiple people called the decision to push on aluminum now “bad timing,” and one said: It’s “classic Trump method of leverage,” to do it days before a big event like the USMCA’s entry into force.
“Bringing back these tariffs would be like a bad horror movie. Most of the U.S. aluminum sector opposes them, and they’ll hurt American manufacturers who use aluminum as an input,” said Neil Herrington, senior vice president for the Americas at the U.S. Chamber of Commerce.
U.S. Trade Representative Robert Lighthizer acknowledged last week in a Senate Finance Committee hearing that there were recent surges in imported steel and aluminum, “substantially from Canada, some from Mexico.”
“It’s something of genuine concern to us and that we are looking at,” Lighthizer said.
Last year, the Trump administration exempted Canada and Mexico from its tariffs on imported steel, after both countries lived with the tariffs for more than a year. Trump imposed those tariffs on most countries around the world in 2018 citing national security.
But under the agreement to lift the tariffs, the U.S. said it could raise duties again after it consults with Canada and “in the event that imports of aluminum or steel products surge meaningfully beyond historic volumes of trade over a period of time.”
The U.S. trade chief said he was in talks with both countries about it, but it’s not clear if those talks have been part of formal consultations as outlined in the agreement with Canada on the issue.
Canada, for its part, can retaliate only in the affected sector — aluminum — if the tariffs are reimposed.
However, sources argued that Canada could still push to retaliate with tariffs on other sensitive U.S. goods, like agricultural products. Ottawa previously imposed retaliatory tariffs against more than $12 billion in U.S. products, the bulk of which were American farm goods, in response to the U.S. tariffs on imported steel and aluminum. Those tariffs were removed when the agreement was struck in May 2019.
Canadian Ambassador to the U.S. Kirsten Hillman on Tuesday confirmed that the U.S. and Canada have been in ongoing talks about imported aluminum since last year.
“We firmly believe that the Canadian aluminum exports to the U.S. aren’t hurting the U.S. market in any way,” Hillman said during a webinar hosted by the American Council for Capital Formation. “Our discussions are ongoing.”
She added that the USMCA will be positive for the region as it pushes for more aluminum made in North America and includes tools to curb transshipments of the metal from countries outside the region.
The push to reimpose tariffs stems from two U.S. primary aluminum producers — Century Aluminum and Magnitude 7 Metals, who argue that an increase in aluminum coming from Canada has led to aluminum prices plummeting.
But the broader U.S. aluminum industry, represented by the Aluminum Association, has pushed back and urged the Trump administration to not impose tariffs or quotas.
“Everyone is entitled to their opinion on this issue, but facts are facts,” Aluminum Association President Tom Dobbins said in a statement earlier this month. “Imports of primary aluminum from Canada today are consistent with long-term trends long predating the imposition of Section 232 tariffs.”
The dispute centers over whether there has been a “meaningful surge of imports” from Canada. A report from CRU Group, an independent aluminum analysis firm, seems to bolster the Aluminum Association’s position. It found the volume of U.S. imports of unwrought aluminum from Canada are on pace to increase 14 percent this year.
However, that still would be 5 percent less than 2017 import volume, and only 2 percent above average import levels in 2015-2017, the report said.
A report from a second analytical firm, Harbor Aluminum, supports Century Aluminum and Magnitude’s side of the argument. It concludes imports surged after Trump ended the tariff on Canadian aluminum last year.
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