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Article: Trump Reinstates Tariff on CanadianAluminum-https://www.nytimes.com/2020/08/06/business/economy/trump-canadian-aluminum-t
ariffs.html
WASHINGTON — President Trump announced Thursday that he was reimposing a 10 percent
tariff on Canadian aluminum to help struggling American producers, a step that is likely to incite
retaliation and worsen ties with Canada just one month after the countries’ new trade deal went
into effect.
Speaking at a Whirlpool factory in Clyde, Ohio, Mr. Trump said that he had signed a
proclamation earlier on Thursday that would reimpose the levy on Canada, accusing the country
of “taking advantage of us as usual.”
“To be a strong nation, America must be a manufacturing nation and not be led by a bunch of
fools,” the president said. “That means protecting our national industrial base.”
Mr. Trump imposed tariffs on steel and aluminum from Canada, Mexico and the European
Union in early 2018, prompting those countries to respond with their own tariffs on American
goods. The levies on imports from Canada and Mexico were not lifted until the following year,
when the countries reached an agreement as part of the negotiations toward a new North
American trade deal.
But the United States retained the right to reinstate them if it observed a spike in metal imports,
which Mr. Trump cited on Thursday.
“My administration agreed to lift those tariffs in return for a promise from the Canadian
government that its aluminum industry would not flood our country with exports and kill all our
aluminum jobs, which is exactly what they did,” Mr. Trump said Thursday. “Canadian aluminum
producers have broken that commitment.” On Thursday evening, Prime Minister Justin
Trudeau announced Canada’s response via Twitter. “In response to the American tariffs
announced today, Canada will impose countermeasures that will include dollar-for-dollar
retaliatory tariffs,” he wrote. “We will always stand up for our aluminum workers. We did so in
2018 and we will stand up for them again now.” The deputy prime minister, Chrystia Freeland,
issued a pointed statement, as well. “In the time of a global pandemic and an economic crisis,”
Ms. Freeland said, “the last thing Canadian and American workers need is new tariffs that will
raise costs for manufacturers and consumers, impede the free flow of trade, and hurt provincial
and state economies.” She also rejected Mr. Trump’s national security justification for the
measure. “Canadian aluminum strengthens U.S. national security and has done so for decades
through unparalleled cooperation between our two countries,” she said in the statement. For
months, American and Canadian officials have debated whether Canada’s rising imports violate
that agreement or constitute a surge. Imports of Canadian aluminum have risen since the tariffs
were lifted last year, but they remain below levels seen within the last few years. The American
aluminum industry has struggled to compete in recent years with producers in countries like
China, Russia, Iceland, the United Arab Emirates and Canada that offer generous state subsidies
or benefit from cheap electricity. Today, only a handful of American aluminum smelters, which
make raw aluminum out of bauxite, still operate. Supporters of the tariffs say that they have
helped to revive American production, but that imports from Canada and the economic slump
, that accompanied the pandemic had once again thrown the industry into disarray. In April, the
aluminum giant Alcoa idled a smelter in Ferndale, Wash., saying that production there was
“uncompetitive.” Two American companies with domestic aluminum capacity, Century
Aluminum and Magnitude 7 Metals, have lobbied intensely for the tariffs to be reimposed. In a
statement Thursday, Michael Bless, the chief executive of Century Aluminum, said the move
“demonstrates this administration’s continued dedication to restoring the U.S. aluminum
industry” and “helps to secure continued domestic production of this vital strategic material.”
But the rest of the aluminum industry, which has operations spread around the globe, including
in Canada, has fought against the measure. The multitude of industries that use aluminum to
make products including cars, beer cans and washing machines, have also argued against the
levies, saying they increase their costs and make their products less competitive globally. Even
Whirlpool, the appliance maker where Mr. Trump made his announcement on Thursday, has
seen its costs for raw materials rise as a result of the metal levies. In June, executives from more
than 15 of the world’s largest aluminum companies, including Alcoa, Constellium and Novelis,
sent a letter to the Trump administration arguing against the tariffs. “Fully 97 percent of U.S.
aluminum industry jobs are in mid-and-downstream production and processing,” the letter read.
“These jobs depend on a mix of domestic and imported primary aluminum, including from
countries like Canada.”Jim McGreevy, the chief executive of the Beer Institute, a trade
association of beer producers and importers, said his group strongly opposed the decision.“Since
the implementation of aluminum tariffs in 2018, the American beverage industries have paid
more than $582 million in tariffs,” he said. “Increased aluminum premiums due to tariffs
increase the cost of beer production and force brewers to make difficult business decisions —
especially amidst a global pandemic that has reduced overall sales while simultaneously
increasing demand for aluminum cans.” In a statement, Myron Brilliant, the executive vice
president of the U.S. Chamber of Commerce, called the move “a step in the wrong direction” and
urged the administration to reconsider.“These tariffs will raise costs for American
manufacturers, are opposed by most U.S. aluminum producers and will draw retaliation against
U.S. exports — just as they did before,” he said. Mr. Trump’s metal tariffs have been imposed
with the legal rationale of protecting American national security. That has particularly irked
Canadians, who count themselves as America’s closest ally.“It’s totally misguided, it’s the wrong
thing at the wrong time,” said Jean Simard, the president and chief executive of the Aluminium
Association of Canada. “We’re still in a Covid-related downturn.”Mr. Simard said that shipments
of basic aluminum ingots to the United States from Canada had risen after automakers and
other importers of more sophisticated aluminum closed their factories because of the pandemic.
But he said that with renewed manufacturing in the United States, the market was rebalancing.
According to Mr. Simard’s group, exports of basic aluminum ingots from Canada declined 16
percent in June and fell 40 percent last month. The tariff will most likely cause American
industries that use aluminum to turn to China and Russia for their supplies, Mr. Simard said.
Currently, according to Mr. Simard, the United States aluminum production capacity can meet
only about one-sixth of the country’s consumption of the metal.
The Canadian aluminum industry, Mr. Simard said, will push the Canadian government to apply
tariffs on American-made products made from aluminum, including beer cans and bicycles, for
which there are Canadian substitutes. “We can drink Canadian beer out of Canadian cans,” Mr.
Simard said.
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