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US groups debate Canadian aluminum tariff as USMCA nears

  • Monday, June 22, 2020
  • Source:ferro-alloys.com

  • Keywords:US groups ,aluminum tariff
[Fellow]US groups debate Canadian aluminum tariff as USMCA nears

[ferro-alloys.com]Industry groups and politicians traded arguments this week on whether Section 232 tariffs should be reinstated on US aluminum imports from Canada as the United States-Mexico-Canada Agreement, the updated North American trade pact, is scheduled to take effect July 1.

US Trade Representative Robert Lighthizer said the reinstatement of tariffs on Canada, which received an exemption from the tariffs in 2019, would be an option if it is determined that aluminum imports from the country have risen.

"I would say there have been surges of steel and aluminum, substantially from Canada and some from Mexico, and it is something that we are looking at," Lighthizer said before a US Senate hearing on trade policy June 17. "The way the agreement worked is both countries agreed that they would maintain substantially the same trade as they have before, but we are seeing surges in some products."

At the hearing, Senate Finance Committee Chairman Chuck Grassley said the Section 232 steel and aluminum tariffs were one of the factors that stalled the USMCA negotiations.

"I'm glad the tariffs are gone, and we are about to start a new era of free trade in North America," Grassley said. "However, I am concerned that some groups are trying to push to reinstitute tariffs."

Pennsylvania Senator Pat Toomey said the tariffs on steel and aluminum have harmed the US manufacturing industry.

"In my state of Pennsylvania, we have fewer manufacturing jobs today than we had three years ago," Toomey said during Lighthizer's hearing. "Far more people are in the business of using steel and aluminum to produce things than the people who actually make steel and aluminum. So when tariffs raise the cost of the steel and aluminum, those are higher cost inputs for those manufacturers who are less able to compete with foreign companies that are not subject to those taxes."

Imports from Canada rising: APAA

American Primary Aluminum Association CEO Mark Duffy told S&P Global Platts the tariffs against Canada must resume to address rising aluminum imports from the country.

"Canadian product has surged into the US, causing the domestic price of aluminum to fall, capacity to stall and workers to be laid off," Duffy said June 19. "Canadian imports have surged by 24% over the period prior to the imposition of tariffs and over 80% above previous tariffed quarters."

The tariffs on Canada were critical in creating jobs and growing primary aluminum capacity in the US, according to Duffy.

"The Section 232 tariffs helped level the playing field for the domestic industry and American workers as formerly idled capacity restarted in places like Kentucky, Indiana, Missouri and across the United States, until the Canadian exemption was put into place," Duffy said.

Duffy said several smelters in the US are now at risk of closure due to Canada's exemption and subsequent import volumes.

"It is no coincidence that US smelters were viable when the Canadian tariffs were in place, and now that the tariffs are no longer in place, the smelters are under threat," Duffy said.

The Aluminum Association, a separate group that represents the US aluminum industry, said aluminum imports from Canada have not risen significantly since the exemption.

"Everyone is entitled to their opinion on this issue, but facts are facts. Imports of primary aluminum from Canada today are consistent with long-term trends long pre-dating the imposition of Section 232 tariffs," Aluminum Association CEO Tom Dobbins said in June 9 statement.

Aluminum tariffs on Canada 'misguided'

Aluminium Association of Canada CEO Jean Simard said efforts to reimpose the aluminum tariffs on Canada opposed the interests of US manufacturers and consumers.

"I think that the push for putting back tariffs on Canada is very unfortunate, it's misguided, it's totally self-interested, it doesn't do anything for the American consumer and it doesn't do any good for the US industry," Simard told Platts in a recent interview.

Simard said the APAA's lobbying for the tariffs represented the interests of foreign traders rather than US industry. Conversely, he said he favored the anti-tariff position of the Aluminum Association.

"The APAA strictly represents the interest of a foreign, Swiss-based trading concern, whereas the Aluminum Association represents the whole US aluminum industry, with exception to those two other companies that are directly linked to Glencore, to the Swiss traders," he said.

The APAA represents US-based Century Aluminum and Magnitude 7 Metals.

Simard said new aluminum tariffs on Canada would conflict with the goals of the USMCA.

"Can you see any rationale, any logic in putting tariffs on your biggest strategic ally and supplier at the same time as you are implementing a new modernized free trade agreement with that same partner? I can't see any logic," Simard said.

The Aluminum Association provided similar comments regarding the renewed calls for tariffs with USMCA approaching.

"We are genuinely perplexed by the efforts of one or two companies to move backward on maintaining the free flow of aluminum in North America, particularly on the cusp of implementing a historic trade agreement," Dobbins told Platts. "The vast majority of US aluminum industry jobs rely on a mix of domestic and imported primary aluminum to meet demand. Our members, which represent the entire industry value chain, support a tariff-free aluminum trade within North America."

(S&P Global Platts)

  • [Editor:王可]

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