Canada plans to retaliate with counter tariffs on US, claims no surge seen in aluminium exports this year

Following the United States announcement to restore the 10 per cent tariffs on Canadian non-alloyed unwrought aluminium, Canada has decided to retaliate with counter tariffs on the US.

The news came after Deputy Prime Minister of Canada Chrystia Freeland said in a statement that Canada intends to swiftly impose dollar-for-dollar countermeasures, in response to the American tariffs. She called the United States new tariffs “unwarranted and unacceptable,” noting that Canadian aluminium does not undermine U.S. national security but strengthens it.

She added that these tariffs were the last thing that American and Canadian workers needed during the COVID-19 pandemic and ensuing economic crisis.

According to Chrystia Freeland, the tariffs would bring in another toll on workers and regional economies that have already been hurt by the COVID-19 pandemic. She has thus, pledged Ottawa to retaliate as it did in 2018 after the United States first additional 10 per cent tariffs on aluminium from Canada.

Rio Tinto, Canada's largest aluminium producer, said: “The tariffs are unfortunate as they only increase prices for U.S. consumers and undermine market confidence in secure supplies of aluminium in North America.”

"We are working with our U.S. customers to minimize any negative impacts to the integrated supply of aluminium in North America," a Rio Tinto spokesman said.

The Aluminium Association of Canada is also highly disappointed with the new tariffs.  Jean Simard, President and CEO of the Aluminium Association of Canada, said that there was no surge in aluminium exports from Canada in 2020 so far over 2019. Monthly anomalies do not make a yearly surge. They are simply the results of changing market dynamics in crisis time.

He noted, “We were already seeing a rebalancing in product mix from basic commodity ingot (P1020) back to value added product (VAP) through the recovery of the automotive industry.”

In fact, the Aluminium Association of Canada found a drop of 2.6 per cent in primary aluminium exports to the US in the month of June, while in the first 6 months the exports were nearly 5 percent lower than the same period in 2017.

So, since there is no surge in aluminium exports from Canada to the US, all options for retaliation should be considered by Canada. Moreover, this tariff goes against the spirit of both the Joint Statement of May 17, 2019, and the overarching CUSMA. “At a time when we should work together to jump-start our economies by strengthening our supply chains, here we are playing into the hands of Russia and China. This move will not only benefit foreign traders, but will increasingly substitute Canadian metal with metal from Russia without addressing the real problem: China,” mentioned Jean Simard.