Canada to impose dollar-for-dollar countermeasures in response to US aluminum tariffs: official

  • Monday, August 10, 2020

  • Keywords:tariff,U.S, Canada
[Fellow]Canada to impose dollar-for-dollar countermeasures in response to US aluminum tariffs: official

[]Canada intends to impose dollar-for-dollar countermeasures in response to the US decision Aug. 6 to reinstate import tariffs on Canadian aluminum, Canadian Deputy Prime Minister Chrystia Freeland said Aug. 7.

"We will impose dollar-for-dollar countermeasures in a balanced and perfectly reciprocal retaliation," she said in a press briefing streamed online. "We will not escalate and we will not back down."

The Canadian government launched a 30-day consultation period Aug. 6 on a broad list of aluminum products that could be included in the retaliatory tariffs, she said. The countermeasures are currently scheduled to take effect by Sept. 16, according to a government notice. The broad list of products under consideration includes everything from aluminum ores and concentrates to refrigerators and golf clubs.

President Donald Trump signed a presidential proclamation Aug. 6 implementing a 10% tariff on imports of non-alloyed unwrought aluminum from Canada. The Trump administration placed 10% tariffs on primary aluminum imports, along with 25% tariffs on steel imports, in 2018, under Section 232 of the Trade Expansion Act of 1962, citing a threat to US national security. Canada and Mexico were granted exemptions from the tariffs in 2019 amid negotiations for the US-Mexico-Canada Agreement.

Freeland said Canada's approach to the US tariffs will not differ from the first time they were implemented in 2018. The US tariffs on Canadian aluminum are set to take effect Aug. 16.

"These tariffs are unnecessary, unwarranted and entirely unacceptable," she said. "They should not be imposed. Let me be clear, Canadian aluminum is in no way a threat to US national security. ... On the contrary, Canadian aluminum is essential for US industry, including the US defense industry."

Freeland questioned the timing of the US decision to invoke additional tariffs as the two countries work to combat the coronavirus pandemic.

"In imposing these tariffs the US has taken the absurd decision to harm its own people at a time when its economy is suffering the deepest crisis since the Great Depression," she said, noting that the washing machines Trump stood in front of at Whirlpool's manufacturing facility when announcing the tariffs would become more expensive as a result.

Additionally, the tariffs are a negative to the North American automotive industry, coming just one month after the US-Mexico-Canada Agreement took effect July 1, boosting rules of origin rules for the industry, she said.

When asked if the Trump administration was considering tariffs on Canadian steel, Freeland said the conversations have been specific to non-alloyed unwrought aluminum to date. The decision, however, ultimately rests with the US.

"I have long believed with this administration the best Canadian policy is hope for the best, plan for the worst," she said.

Canadian industry reacts

The Canadian Manufacturers & Exporters (CME) association issued a statement late Aug. 6 condemning the US decision to apply tariffs.

"The measures announced today are both unjustified and unnecessary, and will have a negative impact on the unprecedented efforts being made to restore our respective economies, which are reeling in the wake of COVID-19," CME CEO Dennis Darby said. "CME urges the federal government to respond quickly with measures that send a strong message that today's actions cannot be tolerated and will have a negative impact on both the Canadian and US economies."

The Aluminum Association of Canada (AAC) said the tariffs on aluminum undermine the benefits of the USMCA.

"We were already seeing a re-balancing in product mix from basic commodity ingot (P1020) back to value added product (VAP) through the recovery of the automotive industry," AAC CEO Jean Simard said in a statement. "There is no surge for 2020 over 2019, monthly anomalies do not make for a yearly surge, they are simply results of changing market dynamics in crisis times."

(S&P Global Platts)


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