United States removes Canada aluminum tariffs after retaliation threat

September 16, 2020

The United States has removed a month-long tariff imposed on Canada that aimed to limit the imports of raw aluminum. The United States will allow duty-free shipments of the metal to resume retroactive to Sept. 1, the U.S. Trade Representative’s (USTR) office said.

USTR had reimposed a 10 pecent tariff on non-alloyed, unwrought aluminum from Canada in August after a surge in imports across the northern U.S. border. In a statement, the agency said it had determined after consultations with the Canadian government that aluminum imports from Canada were expected to “normalize” to 70,000 to 83,000 tons per month in the last four months of 2020.

The decision to reverse course in a matter of weeks comes as the U.S. presidential election season heats up. Bloomberg reported that the tariffs increased domestic aluminum prices amid a shortage of beverage cans in North America, heightening concerns that an increase in the raw material could fall on the shoulders of domestic brewers and soda companies, and eventually consumers.

While the USTR announced the removal of the tariff, it said it “expects” shipments from Canada will be no greater than 83,000 tons in September and November and no greater than 70,000 tons in October and December, effectively signaling a quota. But Canada has not yet made a commitment to a volume limit.

Deputy Prime Minister Chrystia Freeland told journalists in a press conference that Canada would drop the counter tariffs it threatened as retaliation, but left the door open for future measures if the U.S. imposed duties. USTR said it would reimpose the 10 percent tariff retroactively if actual shipments exceed 105 percent of the expected volume for any of the months.

“Should tariffs be reimposed on our aluminum exports in the future, Canada will retaliate with perfectly reciprocal dollar-for-dollar tariffs as we have done in the past,” Freeland said. “We will always stand up for our workers and our industry.”

“After consultations with the Canadian government, the United States has determined that trade in non-alloyed, unwrought aluminum is likely to normalize in the last four months of 2020, with imports declining sharply from the surges experienced earlier in the year,” the U.S. Trade Representative’s office said in a statement.

A senior Canadian government official stressed the USTR announcement was a U.S. decision to drop tariffs.

“What American manufacturers need now is certainty that these tariffs won’t make another reappearance,” Myron Brilliant, EVP and head of international affairs, U.S. Chamber of Commerce, said in an emailed statement. “Setting aside these threats once and for all will allow American job creators to focus on economic recovery.”

 

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