Trump administration officials are threatening to reimpose tariffs on Canadian aluminum if Ottawa does not swiftly agree to cut the amount of the metal exported to the U.S., said three industry sources on both sides of the border with knowledge of the confidential discussions.
Deputy U.S. trade representative Jeffrey Gerrish told Canadian Ambassador Kirsten Hillman in a Friday phone call that Canada has until July 1 to agree to export control measures, such as quotas, or Robert Lighthizer, the administration’s trade chief, will recommend that President Donald Trump reimpose tariffs, one of the sources said.
A Canadian government official said Ms. Hillman discussed aluminum and steel exports with top officials in Mr. Lighthizer’s office on Friday.
The White House is also considering reimposing steel tariffs on Canada, the three industry sources said, but appears to be moving more slowly on that decision. The sources were not authorized to speak publicly about the content of the talks.
The threats raise the prospect of a renewed trade war even as both countries reel from the COVID-19-induced economic collapse. And they come the week before the U.S.-Mexico-Canada Agreement is set to take effect on July 1.
It is not entirely clear why the Trump administration is suddenly eyeing tariffs again, but the move appears motivated at least in part by lobbying from two U.S. aluminum companies. Mr. Trump and Mr. Lighthizer are also economic protectionists who often blame imports for hurting American industry.
A spokeswoman for Deputy Prime Minister Chrystia Freeland hinted that Canada would retaliate if Mr. Trump brings back tariffs.
“We will always defend Canada’s aluminum sector and its workers,” Katherine Cuplinskas wrote in an e-mail. “We firmly believe that our aluminum exports do not harm the U.S. market.”
Mr. Lighthizer’s office did not respond to a request for comment.
The U.S. is Canada’s main market for aluminum and steel, buying more than 80 per cent of its exports of both metals. Canadian aluminum exports to the U.S. totalled US$8.4-billion in 2017, the last full year without tariffs, while steel and iron were US$5.2-billion, according to American government figures.
Mr. Trump imposed tariffs of 25 per cent on steel and 10 per cent on aluminum imported from Canada in 2018. Canada retaliated with wide range of tariffs on goods that included bourbon and ketchup. Mr. Lighthizer demanded Canada agree to export quotas in exchange for ending the trade war. Canada refused.
Mr. Lighthizer ultimately backed down in May of last year and lifted the tariffs. Under the provisions of that deal, if exports of any steel or aluminum product from Canada “surges,” the U.S. can reimpose tariffs on that product. In such a scenario, the agreement stipulates, Canada could only retaliate with metals tariffs of its own. But if Ottawa concludes the U.S. is not following the deal, Canada might impose tariffs more broadly to crank up the pressure, as it did during the previous trade war.
Even if Mr. Lighthizer recommends tariffs, there is no guarantee Mr. Trump would impose them. Many U.S. industries oppose the levies, which would drive up manufacturing costs for cars, washing machines and other goods because the U.S. does not produce enough aluminum to meet demand.
“Bringing back these tariffs would be like a bad horror movie. Most of the U.S. aluminum sector opposes them, and they’ll hurt American manufacturers who use aluminum as an input,” Neil Herrington, a senior vice-president of the U.S. Chamber of Commerce, said in a statement.
Free-trade-loving congressional Republicans will also likely put pressure on the White House not to start another trade war.
“The economy is fragile at best, the President’s numbers are down, and Republicans are fighting for their lives in key races. They’ll take on the White House,” said Daniel Ujczo, an Ohio-based trade lawyer.
The lobbying for tariffs is coming from Century Aluminum and Magnitude 7 Metals, American producers who would gain an advantage over their Canadian competitors if the levies were put in place. Century is partly owned by Swiss-based Glencore, a metals trader that could benefit from a spike in aluminum prices. The companies’ industry group, the American Primary Aluminum Association, argues Canadian imports have surged since the end of tariffs.
But the Aluminum Association, a much larger group representing about 50 companies, contends there has been no surge. Its figures show that Canadian exports to the U.S. are comparable to levels in 2017, before Mr. Trump imposed tariffs.
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Adrian Morrow