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‘Like a Bad Horror Movie’: U.S. Weighs Reinstating Canadian Aluminum Tariffs

‘Like a Bad Horror Movie’: U.S. Weighs Reinstating Canadian Aluminum Tariffs


‘Like a Bad Horror Movie’: U.S. Weighs Reinstating Canadian Aluminum Tariffs

WASHINGTON — The Trump administration is weighing reimposing tariffs on Canadian aluminum over concerns about rising exports to the United States, a move that would strain ties and possibly incite Canadian retaliation just as a revised North American trade deal goes into effect.The tariffs would revive a bitter fight that complicated efforts to complete the United States-Mexico-Canada-Agreement, which goes into effect on July 1. To pave the way for that pact, the Trump administration agreed to drop tariffs it had imposed on aluminum and steel from Canada and Mexico but retained the right to reinstate levies if it observed a spike in metal imports.Imports of raw Canadian aluminum into the United States have increased since that agreement was signed. But Matt Meenan of the Aluminum Association, which represents U.S. and foreign-based companies that make up the vast majority of the industry, said the uptick was consistent with historical trends and “not particularly surprising given market fundamentals.”“We don’t think it warrants going back to the drawing board on all of this stuff — and certainly not a week before implementing U.S.M.C.A.,” Mr. Meenan said.Several companies that make aluminum in the United States have asked for greater protection. But business groups that have long opposed the tariffs were quick to criticize the move, saying the United States risked inciting another trade war at a critical moment.“Bringing back these tariffs would be like a bad horror movie,” said Neil Herrington, the senior vice president for the Americas at the U.S. Chamber of Commerce. “Canada will surely retaliate against U.S. exports. This is the wrong way to mark the entry into force of the new North American free trade agreement on July 1.”President Trump imposed tariffs on foreign steel and aluminum in 2018, an effort to shelter manufacturers like U.S. Steel and Century Aluminum. But the tariffs, which were imposed on national security grounds, rankled close American allies.Last May, the Trump administration agreed to exempt Canada and Mexico from the tariffs, a concession that ultimately helped bring to a close negotiations over revising the North American Free Trade Agreement. The deal contained a provision that allowed the United States to again raise tariffs in the event of a surge in imported products. The countries promised to carry out consultations if a surge occurred, and if those were not successful, the governments could impose a tariff of 25 percent on steel products or 10 percent on aluminum products.American officials have tried to persuade their Canadian counterparts to voluntarily restrain their own exports. Those discussions included a call Friday on between Kirsten Hillman, Canada’s ambassador to the United States, and senior officials with the Office of the United States Trade Representative.American officials told their Canadian counterparts that if the situation was left unresolved, the United States planned to move ahead with restrictions on Canadian aluminum as of July 1, according to people familiar with the discussions.The Office of the United States Trade Representative did not respond to requests for comment. Speaking at a virtual event on Tuesday, Ms. Hillman said that discussions were continuing over the issue, and that Canada firmly believed that their aluminum exports were not “hurting the U.S. market in any way.”“We’re emphasizing with our American friends the fact that we have this deep, mutually supportive industry, and that far from being harmful to the American aluminum sector, our aluminum exports are indeed a great help and benefit,” Ms. Hillman said.The return to tensions with Canada comes at a particularly delicate moment, as the Trump administration prepares to usher in its signature North American trade deal.The revised pact fulfills a key campaign promise for Mr. Trump by updating the quarter-century-old NAFTA with stronger protections for workers and new rules to encourage auto manufacturing in North America. It also contains a provision that was expected to bolster the continent’s metals production, by requiring least 70 percent of the steel and aluminum an automaker purchases to originate in North America.But in a congressional hearing last week, Mr. Trump’s top trade official indicated that the United States was readying challenges in areas where it believed Canada and Mexico might not be in compliance with the new agreement, including over Mexico’s treatment of labor issues and biotechnology products.“There are a number of things we’re looking at that are quite troubling,” the official, Robert E. Lighthizer, told the House Ways and Means Committee last Wednesday. “One of the reasons I wanted to get this into effect on July 1 was so we could start enforcing it.”Mark A. A. Warner, a Canadian and United States trade lawyer, said the dispute had arisen in part because “surge” was not clearly defined in the agreement the three countries reached.Tariffs on Canadian aluminum would be a “setback,” Mr. Warner said, but that “shouldn’t derail the Canada–U.S. relative trade détente leading up to the November election.”“It’s probably not in Canada’s interest to react in a way that makes it a bigger target for a cornered, mercurial president in search of new ways to return to his ‘golden oldies,’” Mr. Warner said.The tariffs have plenty of critics among the many industries that use aluminum to make other products, including cars, boats and beer kegs. Much of the aluminum industry, which is composed of multinational companies with operations around the world, also opposes the levies.Two companies with U.S. aluminum production, Century Aluminum and Magnitude 7 Metals, have urged the administration to reimpose tariffs.In May, the American Primary Aluminum Association, which represents the two companies, sent a letter to Mr. Lighthizer and Wilbur Ross, the commerce secretary, saying that an import surge from Canada was threatening the viability of their business.“The surge of Canadian metal has a caused the price to collapse and is endangering the future viability of the U.S. primary industry,” the letter said. Only a handful of aluminum smelters, which produce raw aluminum out of bauxite, still operate in the United States. In April, the aluminum giant Alcoa idled a smelter in Ferndale, Wash., saying that production there was “uncompetitive” based on current market conditions.Aluminum production is hugely energy intensive, and the industry has gradually migrated from the United States toward Canada, Iceland, Russia, the United Arab Emirates and other countries with ample petroleum, hydroelectric or geothermal power. China, which heavily subsidizes aluminum production, is also a major global producer.Since aluminum is vital for producing planes, cars and other products, the Trump administration has seen this exodus of aluminum smelters as a threat to national security, though critics of that view say the United States has a ready and secure supply of aluminum in Canada, an ally that fought in Afghanistan and elsewhere alongside U.S. forces.In a congressional hearing with Mr. Lighthizer last week, Representative Suzan DelBene, Democrat of Washington, said that closing the Alcoa smelter had put 700 people in her district out of work and she urged the administration to step up its efforts to address Chinese overcapacity.“It’s something we’re working on,” Mr. Lighthizer said. “The president did take a bold step when he put tariffs on. And the problem unfortunately is not just China, right, as you know well, it’s also a problem with Canada that we’re working on.”

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