U.S. President Donald Trump has started a new continental tariff war, reimposing tariffs of 10 per cent on most Canadian aluminum that Canada will match with tariffs of its own.
“In response to the American tariffs announced today, Canada will impose countermeasures that will include dollar-for-dollar retaliatory tariffs,” Prime Minister Justin Trudeau said on Twitter on Thursday evening.
In a statement, Deputy Prime Minister Chrystia Freeland described Mr. Trump’s move as “unwarranted and unacceptable.” She did not say if the retaliatory tariffs would affect only U.S. aluminum or would extend to other exports.
The U.S. tariffs take effect on Aug. 16 and apply to raw aluminum, which the White House says accounted for 59 per cent of Canadian exports of the metal to the U.S. over the past year. Mr. Trump is imposing them under Section 232 of the Trade Expansion Act, which allows the President to use tariffs for “national security” purposes.
”Canadian aluminum does not undermine U.S. national security,” Ms. Freeland said. “Canadian aluminum strengthens U.S. national security and has done so for decades through unparalleled co-operation between our two countries.”
The new trade battle comes during a difficult re-election campaign in the United States and as the economies of both countries struggle with the effects of the coronavirus pandemic.
At a Whirlpool washing machine factory in Ohio on Thursday, Mr. Trump accused industry north of the border of trying to “kill all our aluminum jobs” with a “flood” of exports.
”Canada was taking advantage of us, as usual,” he said.
U.S. President Donald Trump wears a protective face mask due to the coronavirus disease (COVID-19) pandemic as he tours the assembly line at a Whirlpool Corporation washing machine factory in Clyde, Ohio, U.S., August 6, 2020. REUTERS/Joshua RobertsJOSHUA ROBERTS/Reuters
The United States does not produce enough aluminum to meet its own demand. This means U.S. businesses and consumers will either have to pay the tariff to continue importing Canadian aluminum or find other foreign sources.
Canadian aluminum sales to the U.S. totalled US$8.4-billion in 2017, the last full year without tariffs, accounting for 80 per cent of Canada’s exports of the metal.
The President imposed tariffs on aluminum and steel in 2018. Canada retaliated with duties on a string of U.S. products from bourbon to ketchup. The two sides agreed to lift the tariffs last year. Under the terms of that deal, if there was a “surge” in any steel or aluminum products from Canada, the U.S. could reimpose tariffs on that specific product and Canada would not retaliate with tariffs on other goods.
Two U.S. companies, Century Aluminum Co. and Magnitude 7 Metals, have lobbyied Mr. Trump to reimpose tariffs, arguing that aluminum imports from Canada have surged since they were lifted. But Canadian metals producers, as well as most of the U.S. industry, say there is no surge and that overall imports from Canada are comparable to their levels before the tariffs.
In talks between the two countries in recent weeks, U.S. Trade Representative Robert Lighthizer demanded Canada agree to aluminum export quotas to avoid renewed tariffs, three industry sources on both sides of the border said. One of the sources said Canadian officials agreed to discuss the idea. A Canadian government source, however, said Ottawa remained firm in negotiations that it would not accept quotas.
The Trump administration last week informed Ottawa, through Ms. Freeland and the Canadian embassy in Washington, that it would move forward with tariffs, two of the industry sources said.
The Globe and Mail is not identifying the sources because they were not authorized to speak publicly about the confidential discussions.
Flavio Volpe, president of the industry group for Canadian auto parts manufacturers, said Mr. Trump is only hurting his own economy, because everyone from the U.S. military to the Ford Motor Co. relies on Canada’s aluminum.
“Say what you will about Nero, but at least he was a hell of a fiddler. This guy’s burning it all down without a soundtrack,” he said.
Mr. Trump has built his political brand on blaming other countries for the hollowing out of the U.S. manufacturing industry and embracing protectionist measures. Less than three months from election day, he trails Democratic rival Joe Biden in the polls and has lost ground over the summer amid a mounting COVID-19 case count.
Century’s plant is in Kentucky, where Senate Republican Leader Mitch McConnell is facing a strong Democratic challenge to his own re-election this fall.
Jean Simard, president and CEO of the Aluminum Association of Canada, said Canadian aluminum shipments into the United States have not surged, and the tariffs will do nothing to help the U.S. economy. “This is just increasing the cost of aluminum … which is not what is needed right now,” he said.
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