Davis Index: Market Intelligence for the Global Metals and Recycled Materials Markets

Canada announced its intentions to levy dollar-for-dollar retaliatory tariffs on US goods after the latter imposed 10pc tariffs on Canadian P1020 aluminum on August 6.


The Canadian announcement, which came hours after President Trump’s statement on imposing tariffs on its North American neighbor, is a reminder of a similar trade war in 2017-2018 where the US had slapped Sec 232 tariffs on Canadian aluminum and Canada had, in turn, imposed retaliatory tariffs on US aluminum imports.


In a statement late Thursday evening, Canada’s Deputy Prime Minister Chrystia Freeland said that US’s tariffs “citing national security concerns” were “unwarranted and unacceptable” to the Canadian government. She added that rather than undermining US’s security, Canadian aluminum had strengthened it over decades of cooperation between the two countries.


Citing the US Mexico Canada Agreement (USMCA), which came into effect on July 1, Freeland stated that under the new agreement the three countries’ carmakers were required to source at least 70pc of the aluminum needed to make cars from North American suppliers. Thus, the tariffs would hinder this agreement too. The Canadian government said that it would be announcing the details of its countermeasures shortly.


According to Canadian government data, the countries traded primary and semi-finished aluminum products that averaged around C$11.1bn per year between 2017-2019. Moreover, out of the 162,000 US jobs across the aluminum supply chain, 97pc depends on a mix of aluminum produced in the US produced and imported from Canada.


The Aluminium Association of Canada as well as its US counterpart—the Aluminum Association—have both spoken out against the new tariff regime that is to come into effect on August 16. Both the associations reiterated that these tariffs could not have come at a worse time and that the volatility created by removing and re-imposing trade barriers threatened the growth of the US, especially in a market where demand has weakened by 25pc over the past seven months.


Canada, which shares an integrated aluminum market with the US, produced 2.8mn mt of aluminum in 2019 making it the fourth-largest producer of the metal in the world. 

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