Canadian cabinet ministers are staying mum on a new report that U.S. President Donald Trump is looking to impose yet another round of aluminum tariffs against Canada in apparent response to shrinking domestic demand amid the coronavirus economic slump.
Bloomberg reported Tuesday morning that the U.S. plans to re-impose a tariff of 10 per cent on Canadian aluminum coming into the U.S. by the end of the week unless the Canadian government agrees to limit aluminum exports.
The report says those tariffs on Canadian aluminum would go into effect on Canada Day.
But despite repeated questioning on Tuesday, Canadian federal ministers refused to answer questions about whether they have received notification of any such threat.
“We will always defend Canada’s aluminum sector and its workers. The free flow of goods and services, including aluminum, is important for jobs and economic growth in both of our countries,” said Katherine Cuplinskas, press secretary for Deputy Prime Minister Chrystia Freeland, in an email.
“We firmly believe that our aluminum exports do not harm the U.S. market. We are emphasizing this in our ongoing conversations with our American partners.”
Global News followed up asking to confirm whether Freeland’s office has received any notice that tariffs are being considered but has not yet received a clear answer.
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Jean-Yves Duclos, president of the Treasury Board, was also asked repeatedly at a press conference on Tuesday about the report by Bloomberg but refused to give a clear answer.
“We will always defend the interests of the 11,000 aluminum workers that we have,” he said.
“There’s always a diversity of opinions. It would be quite natural that within the administration to the south of us there may be voices that want a return to protectionism. Whether this is actually the case, the Canadian government is always required to protect the interests of its workers.”
If the Trump administration does impose a new round of tariffs on July 1, that would mark two years to the day since it last imposed steep tariffs of 25 per cent on Canadian steel and 10 per cent on Canadian aluminum. That move came as part of a bid to exert pressure in the renegotiation of the new NAFTA deal, now sometimes called CUSMA or USMCA.
In response, the Canadian government imposed an unprecedented round of tariffs worth $16.6 billion on a wide range of American goods, including steel and aluminum.
The U.S. tariffs were imposed under a controversial mechanism of American law known as Section 232 of the Trade Expansion Act.
Those powers give the president the power to impose tariffs on any import believed to be impairing U.S. national security.
Roughly 76 per cent of Canadian aluminum goes to the U.S. as part of a highly integrated market worth about $14.5 billion each year, according to the Canadian government.
U.S. trade representative Robert Lighthizer mused about re-imposing aluminum tariffs during an appearance before the U.S. Senate’s finance committee last week.
He said there have been “surges” in steel and aluminum from Canada and Mexico coming into the U.S. market and that American officials are discussing the situation with both countries.
It’s not clear yet, though, to what extent tariffs are being advocated or threatened by the U.S. administration or whether a formal request has been made to limit exports.
Questions about these details to the offices of Freeland, Lighthizer, the Prime Minister’s Office and the office of Foreign Affairs Minister Francois-Philippe Champagne have yielded no clarity.
The coronavirus pandemic has delivered a massive economic hit to countries around the world as lockdown orders, social distancing and mass unemployment due to workplace shutdowns take their tolls on consumer spending, investor confidence and industrial forecasts for the future.
Jean Simard, president and CEO of the Aluminum Association of Canada, said those factors have taken a toll on consumer demand for things like automobiles.
As a result, Canadian aluminum producers have shifted from producing value-added, more refined products to more basic commodities, and it’s that shift in balance that Simard says American officials are wrongly interpreting as a sudden overall surge.
But he said that is already starting to reverse as auto manufacturers start ramping up production and consumers either defy or emerge from varying forms of isolation.
“There is an acceleration in the recovery of the car market, which means that they’re going to have to restock and demand is building up. So we’re going to see a shift back to value-added products,” said Simard.
“What the U.S. qualifies as a surge will disappear very quickly.“
The U.S. has been among the global epicentres hit hardest by the pandemic and is in the midst of what the World Health Organization recently warned was an “accelerating” surge of new cases.
About 120,000 Americans have died from the virus, while more than 2.3 million in the U.S. alone have been infected, with roughly 26,000 new cases being reported each day.
That’s an increase from about 21,000 cases being reported each day two weeks ago and comes as many U.S. states refuse to implement quarantines, social distancing or orders to wear masks in public spaces.
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