Canada Will Not Retaliate as US Withdraws Aluminum Tariffs on Canadian Products
The 10% tariffs on Canadian non-alloyed unwrought aluminum will be refunded back to Sept. 1, and the tariffs won't return unless Canadian exporters exceed either 70,000 tons or 83,000 tons in that category (see 2009150040), the Office of the U.S. Trade Representative said on Sept. 15. The office said the limits start at 83,000 for the current month, then go to 70,000, then back to 83,000, then back to 70,000 for December. USTR did not say the tariffs would definitely return if Canadian exporters exceed these numbers by at least 5%, and suggested that if Canadian exporters reduced the next month's shipments by the same amount of the overage, that would satisfy USTR.
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Top Canadian politicians, speaking to reporters from Ottawa on Sept. 15 after the announcement, emphasized that they did not agree to these limits, but that they welcomed the unilateral decision to retroactively reverse the tariffs. Trade Minister Mary Ng said “Canada has not conceded anything.” Ng said in this time of severe economic hardship, tariffs are the last thing the aluminum industry on either side of the border needs.
Canada was set to retaliate dollar-for-dollar on products containing aluminum on Sept. 16 (see 2008070048); now it will not do so. But Deputy Prime Minister Chrystia Freeland emphasized that if tariffs return, so will the retaliation. She said in French that the reason she had to say this is that in four years of working with the Trump administration, Canada has seen that it has to be ready for anything -- all possibilities and all eventualities.
When asked whether Canada changed its position on the unacceptability of quotas, Freeland said, “This is not a negotiated deal between Canada and the United States. We have not agreed to anything. We have not negotiated an agreement with the U.S. on quotas.” She declined to speculate on whether the category would exceed the limits laid out by USTR, but she did note that the alleged surge in this category is a consequence of the downturn, and that volumes would return to normal and that is happening.
The U.S. Chamber of Commerce responded to the news by saying it welcomes the announcement, but criticizes the warning that tariffs could return if shipments are too high in the view of USTR. “What American manufacturers need now is certainty that these tariffs won’t make another reappearance. Setting aside these threats once and for all will allow American job creators to focus on economic recovery,” the group said.
Aluminum Association CEO Tom Dobbins said his group's members “support tariff and quota free trade within North America.” Especially as the industry recovers from a drop in demand due to the COVID-19 pandemic disruptions, “it is vital that we keep North American aluminum supply chains open and unencumbered,” he said.