Canada celebrates U.S. abandoning of aluminum tariffs, drops plans to retaliate

Published Sept. 15, 2020 9:22 a.m. ET
Updated Sept. 16, 2020 9:16 a.m. ET

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OTTAWA -- The federal government is celebrating the United States’ decision to lift its 10 per cent tariff on Canadian aluminum, with Deputy Prime Minister Chrystia Freeland calling the tariffs a mistake from the beginning, and “good news” for aluminum workers on both sides of the border.

The U.S. backing down from the trade dispute just hours before Canadian retaliatory measures were to be announced is “such good news,” Freeland said. 

This major move, retroactive to Sept. 1, was announced by U.S. Trade Representative Robert Lighthizer. In a statement, the top American trade official cited “consultations” with Canadian officials and an expectation that trading of aluminum is likely to balance out in the months ahead, as why the Americans decided to withdraw what Prime Minister Justin Trudeau has called “unjust” tariffs.

Withdrawing the tariffs does come with some strings. According to Lighthizer’s office, they stand ready to re-impose the tariffs should they see what they consider a “surge” in imports, spelling out expectations for the cap on shipments of non-alloyed aluminum from Canada between September and December. 

“The United States will consult with the Canadian government at the end of the year to review the state of the aluminum trade in light of trade patterns during the four-month period and expected market conditions in 2021,” said Lighthizer’s statement.

Freeland rejected suggestions that Canada has agreed to U.S.-imposed quotas, saying this is not a negotiated deal between the two countries.

“We have not agreed to anything. We have not negotiated an agreement with the U.S. on quotas,” Freeland said.

“What has happened today is that the United States has chosen to unilaterally lift its tariffs on Canadian aluminum exports to the United States… That's the decision the U.S. has taken. And of course, we welcome that decision. We opposed the tariffs in the first place, and we thought they were bad for everybody. We're glad USTR agrees,” she said, cautioning that should the U.S. decide to take up the tariff fight again, Canada will be ready to hit back with “a reciprocal dollar-for-dollar retaliation.” 

Setting up Tuesday for what was supposed to be Canada’s announcement of how it planned to respond to the trade action by U.S. President Donald Trump, Trudeau told reporters that Canada’s actions would be done to “defend Canadian workers,” and the sector as a whole. 

Now, Canada will not be moving forward with its planned retaliation. Freeland and Small Business, Export Promotion and International Trade Minister Mary Ng announced the decision to drop their plans for countermeasures during what was supposed to be a press conference to outline Canada’s plan of attack. 

In initially signaling a retaliatory response was coming, Freeland said it was her hope that the U.S. administration would realize the trade action would negatively impact the aluminum industry on both sides of the border and backtrack on their decision.

Trump imposed the 10 per cent tariff on raw aluminum from Canada on Aug. 16 under Section 232 of the U.S. Trade Expansion Act, which states the imports pose a threat to American national security, amid condemnation from aluminum organizations on both sides of the border.

As soon as Trump said the new tariffs were coming, Canadian officials said they planned to hit back with $3.6 billion in dollar-for-dollar retaliatory countermeasures once the industry was consulted on a broad list of potential products to slap tariffs on. 

Among the list of potential U.S. aluminum products Canada had its sights on are beverage cans, washing machines, refrigerators, bicycles and golf clubs, meaning prices on both sides of the border would likely increase for these products.

In unveiling the tariffs, Trump claimed that the American aluminum business has been “decimated” by Canada, calling it “very unfair” and accusing Canadian producers of flooding the U.S. with exports, though as The Canadian Press has reported, the White House had been under pressure from governors of New Hampshire, Maine and Vermont to drop the tariffs. 

The trio wrote to Trump asking him to consider the “negative consequences” for consumers and American suppliers. 

Aluminum association groups on both sides of the Canada-U.S. border also spoke out about the tariffs, and rejected the assertion that Canadian producers were dumping aluminum—the term for when selling under domestic price—rather that Canada was selling at the international price at the time, which was impacted by pandemic-related shutdowns.

Using this trade law as justification for the tariffs had been roundly criticized by experts, who have said the move is just as wrong now as it was when it was tried by Trump in 2018, saying that the move was made after failing to listen to the majority of domestic aluminum companies.  

Trump hit Canada with steel and aluminum tariffs in May 2018, during negotiations for the new NAFTA deal. The tariffs remained in place for a year, during which time Canada reciprocated with dollar-for-dollar countermeasures on American steel, aluminum, as well as levelling a surtax on other goods, including coffee, prepared meals, pizza, chocolate, condiments, toiletries, beer kegs, whiskeys, various household items, and motorboats.

A year later, Canada and the U.S. issued a joint statement announcing a decision to lift the tariffs, confirming that the two nations also agreed to terminate World Trade Organization litigation Canada launched after slamming the U.S. tariffs as "punitive" and "an affront" to Canada-U.S. relations.

Ahead of the U.S. backing down, NDP Leader Jagmeet Singh said that the government should be taking a more proactive approach to avoid similar instances in the future.

“It's certainly a lot harder given the unpredictability and frankly irrational behavior of President Trump, no question, but workers deserve us fighting in a proactive way and taking steps ahead of time to make sure that there's help in place,” Singh said. 

In a statement, the Bloc Quebecois said it is pleased to see the tariffs have been abandoned, and called for diversification in the sector to mitigate the potential future impact of tariffs.


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