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USA U-turn on Canada aluminium tariffs

The Office of the United States Trade Representative has done an about-turn on reimposing tariffs on Canada-produced aluminium products only hours before Canada introduced dollar-for-dollar countermeasures worth C$3.6 billion (US$2.7 billion) on US-made aluminium products.
USA U-turn on Canada aluminium tariffs USA U-turn on Canada aluminium tariffs USA U-turn on Canada aluminium tariffs USA U-turn on Canada aluminium tariffs USA U-turn on Canada aluminium tariffs

US government has decided not to reimplement a 10% tariff on certain Canadian-made aluminium products

USTR's Robert Lighthizer said bilateral talks had determined trade in non-alloyed, unwrought aluminium was likely to normalise in the last four months of 2020, with imports declining sharply from the surges experienced earlier in the year.

He said average monthly imports were expected to fall 50% from the average in the period January through July. For the four months to December, imports from Canada are expected to total 83,000 tons, 70,000t, 83,000t and 70,000t, respectively.

The US will resume duty-free treatment of non-allowed, unwrought aluminium retrospective to September 1. If actual shipments exceeded 105% of the expected volume for any month during the four months, the US will impose the 10% tariff retroactively on all shipments made in that month.

The US also reserves the right to reimpose its 10% duty should imports exceed 105% at any time.

In May last year, the US, Canada and Mexico signed a bilateral deal to lift all retaliatory, or so-called Section 232, tariffs. According to the agreement, if surges in imports of specific steel and aluminium products occur, the US may re-impose Section 232 tariffs on those products. Any retaliation by Canada and Mexico would then be limited to steel and aluminium products.

The US will consult with the Canadian government at the end of the year to review the state of the aluminium trade during the four months and expected market conditions in 2021.

Pressure was mounting on both sides of the 49th parallel north in opposition to the proposed tariffs.

Last week the governors of Maine, New Hampshire and Vermont called on president Donald Trump to reverse his decision to reimpose a 10% tariff on imports of non-alloyed unwrought aluminium from Canada. They said it would hurt manufacturers and supply chain businesses in the region.

The US-based Aluminum Association welcomed the move Tuesday, calling the tariffs "disruptive and unnecessary".

"The Aluminum Association and its members support tariff and quota-free trade within North America consistent with the recently implemented US-Mexico-Canada Agreement. Especially as the industry continues to recover from the worst of the COVID-driven demand disruptions, it is vital that we keep North American aluminium supply chains open and unencumbered," said CEO Tom Dobbins.

The Aluminium Association of Canada also welcomed the decision. "Canada's aluminium industry is glad to regain its continued tariff-free entry into the US market, as it strives to meet its integrated value chain requirements in a post-COVID recovery," said CEO Jean Simard.

"Our shared future through a renewed CUSMA rightly deserves our best effort on behalf of our workers, their families and their communities.

"Our industry fully supports the government of Canada's position regarding the removal of tariffs and its clearly stated intention to retaliate at any point in time should the US decide to reimplement tariffs against Canadian aluminium," said Simard.