The US Trade Representative's (USTR) office caught the North American aluminium industry off guard with the unexpected removal of the Section 232 tariffs on Canadian unwrought aluminum, just one month after those tariffs took effect. The tariff was replaced with a quota for the September-December period.
The associations representing the US and Canadian aluminium industries cheered the tariff removal.
“Canada’s aluminium industry is glad to regain its continued tariff-free entry into the US market as it strives to meet its integrated value chain requirements in a post-Covid recovery,” Aluminium Association of Canada president and chief executive officer Jean Simard said in a statement.
But the US Aluminum Association still supports “quota free trade within North America,” the association said. “Removing these disruptive and unnecessary tariffs on Canadian aluminium was the right decision for the US aluminium industry and its 162,000 workers. The Aluminum Association and its members support tariff and quota free trade within North America, consistent with the recently implemented US-Mexico-Canada Agreement [agreement].”
The US Chamber of Commerce and groups representing the US automotive sector also expressed satisfaction in the tariff’s removal. “What American manufacturers need now is certainty that these tariffs won’t make another reappearance,” Myron Brilliant, the chamber's head of international affairs, said in a statement.
“American Automakers applaud the decision by the United States government to resume duty-free treatment of non-alloyed unwrought aluminum imported from Canada. These tariffs were a burden on the US auto industry and we recommend they not be re-imposed,” the American Automotive Policy Council said.
The Motor & Equipment Manufacturers Association (MEMA) agreed. “This is a positive step in the right direction. MEMA has clearly demonstrated the negative impact of tariff to the motor vehicle parts supplier industry, which is the largest sector of manufacturing jobs in the United States. Especially at a time when the industry is facing significant economic challenges, it is important that the US not impose tariffs that increase manufacturing costs and reduce manufacturing competitiveness,” it said.
The Precision Metalforming Association (PMA) praised the removal of the tariffs, but took issue with the quotas.
“Tariffs or quotas would raise costs and disrupt supplies as our member companies continue to recover from unprecedented challenges caused by the Covid-19 pandemic. Manufacturers have paid billions of dollars in steel and aluminium tariffs over the past two years, money that could be used for hiring workers and capital investment. PMA continues to call on the US government to terminate all Section 232 steel and aluminum tariffs," PMA president David Klotz said.
One association expressed frustration with a quota to replace the tariff.
“When something sounds too good to be true, it probably is... It was a surprising statement, not a negotiated deal, with many strings and convenient dates to address the highly unpopular tariff imposed on Canadian imports in August,” Beer Institute president and chief executive officer Jim McGreevy said in a statement.
McGreevy pointed to the volumes outlined in the quota, which he said are below equivalent 2019 levels, and took issue with the USTR’s ability to retroactively impose tariffs on shipments during a month where volumes exceed the quota.
He also questioned the political motives, noting that actual shipments would not be determined until six weeks after the end of each month. That would position the evaluation of September shipments (the first quota month) to occur in mid-November, weeks after the US presidential election.
US aluminium market participants are also struggling with the provisions, with this arrangement yielding significant uncertainty. The uncertain status of Canadian aluminium and the outlook for US premiums has made it difficult for US participants to plan and conduct business.
Most trade associations reacted positively to the surprise announcement on Tuesday September 15 that the United States was removing tariffs on aluminium imported from Canada, but some took issue with the quota system that has taken its place.