US-Canadian trade dispute flares up again

The trade dispute between the United States and Canada flares up again – only a few weeks after the Canada-US-Mexico Trade Agreement came into force on 1 July.

US President Donald Trump again inflames the trade conflict with Canada by re-imposing 10 % tariffs on Canadian aluminium products to protect the US industry from a “surge” in imports. The measure came into effect on 16 August. The Canadian government immediately announced it will impose retaliatory tariffs on C$3.6bn 7 (USD2.7bn) worth of US aluminium products. The countermeasures will be put in place by 16 September.

“At a time when we are fighting a global pandemic, a trade dispute is the last thing anyone needs – it will only hurt the economic recovery on both sides of the border. However, this is what the US administration has chosen to do,” said Chrystia Freeland, Deputy Prime Minister of Canada. The Canadian list of goods that might be subject to tariffs includes aluminium bars, plates, refrigerators, bicycles, washing machines – and golf clubs. This is addressed personally to President Trump who, as is well known, is a passionate golfer.

John Horgan, Premier of British Columbia, a province in Canada, and his cabinet member Michelle Mungall, Minister of Jobs, Economic Development and Competitiveness, said: “Canada’s exports of aluminium create good, family-supporting jobs and are important to the economy. Our aluminium exports do not harm the US market. In fact, US-imposed tariffs will hurt the American economy. We also note much of the US aluminium sector opposes any re-imposition of tariffs. It is unfortunate that the US is taking this step at a time when our countries should be celebrating the Canada-US-Mexico Agreement and working together to help each other economically recover from the ongoing Covid-19 pandemic. We will continue to defend B.C.’s aluminium sector and its workers, and we will stand shoulder to shoulder with the federal government in opposing unfair tariffs placed on our exports.”

The resurgent trade dispute escalates just weeks after the Canada-US-Mexico Agreement came into force on 1 July. In a press statement on 6 August, the Office of the US Trade Representatives vindicated the US tariffs: “Since the President exempted Canada, imports from Canada of the product that accounts for the largest share of Canada’s aluminium exports to the United States have surged above historical levels. The surge has intensified in recent months, despite a contraction in US demand. “

Tom Dobbins, president and CEO of the Aluminum Association, issued the following statement: “We’re incredibly disappointed that the administration failed to listen to the vast majority of domestic aluminium companies and users by reinstating Section 232 tariffs on Canadian aluminium. After years of complex negotiations and hard work by government, industry and other leaders across North America to make the US-Mexico-Canada Agreement a reality, this ill-advised action on a key trading partner undermines the deal’s benefits at a time when US businesses and consumers can least afford it.”

Further, the Aluminum Association points out that the “surge” of primary aluminium imports from Canada are grossly exaggerated. Data recently released by the US Census Bureau show that overall primary aluminium imports from the US to Canada declined about 2.6% from May to June and are below levels seen as recently as 2017. The few companies that stand to benefit from reinstated 232 tariffs on aluminium have cherry-picked government data and omitted important context to build their case, the Association says.