Aluminum tariff more than a minor spat
It represents another crack in the system of free(ish) trade between Canada and the U.S. that benefits the overall economies of both countries
By ATB Economics 18 August 2020 1 min read
A Presidential Proclamation made on August 6 has re-imposed a 10 per cent duty on imports of non-alloyed unwrought aluminum from Canada into the United States. The official excuse is to protect U.S. national security, but the goal is to “protect” American aluminum producers by making Canadian aluminum more expensive for U.S. consumers.
In response, the Canadian government “intends to impose surtaxes against imports of aluminum and aluminum-containing products from the U.S. representing a proportionate amount of Canadian aluminum products affected by the U.S. tariffs.”
The dollar-for-dollar countermeasures could be applied to everything from raw aluminum to washing machines to golf clubs and will make these imports more expensive for Canadian consumers.
Canada exported $3.3 billion of non-alloyed unwrought aluminum (HS code 760110) to the U.S. last year or about 0.6 per cent of our total international merchandise exports.
The numbers are much smaller for Alberta. We only sold $19 million of non-alloyed unwrought aluminum to the U.S. last year or about 0.02 per cent of the total value of exports from Alberta. (We sold $47 million of aluminum scrap to the U.S. last year, but that is not covered by the tariff.)
Given the relatively small amounts involved, does it matter? It does.
First, while small as a proportion of total exports and imports, the extra costs are nothing to sniff at and adversely affect real businesses, real jobs and real consumers. This is not good at the best of times, let alone in the middle of the largest economic contraction since the Great Depression.
Second, it represents another crack in the system of free(ish) trade between Canada and the U.S. that benefits the overall economies of both countries. While it may seem like a minor spat, it’s a symptom—an ironic one coming only a little over a month after the new United States-Mexico-Canada Agreement (USMCA) came into effect on July 1—of rising protectionism in the U.S. and around the world.