Report: U.S. To Hit Canada With Aluminum Tariffs

Report: U.S. To Hit Canada With Aluminum Tariffs

The United States is preparing to re-impose tariffs on aluminum imports from Canada, according to Bloomberg. The move could disrupt cross-border supply chains by leading U.S. companies to re-source aluminum. 

The Trump administration is planning to restore a 10% tariff on July 1 in the event Canada refuses to cut exports, Bloomberg reported, citing anonymous sources. The tariffs would come on the same day that the United States-Mexico-Canada Agreement (USMCA) takes effect.

The revival of aluminum tariffs could impact cross-border supply chains as manufacturers begin to recover from COVID-19 shutdowns. The added cost could lead U.S. manufacturers to find alternative sources for Canadian aluminum – and potentially hurt cross-border trucking companies.

Specialty carriers and divisions within fleets have been hard hit by the fall-off in manufacturing during the pandemic and are slowly recovering. Any changes to cross-border aluminum demand could make a bad situation even worse.  

A Concession On Dairy

Cyndee Todgham Cherniak, a Toronto-based trade lawyer, told FreightWaves a U.S. move on aluminum tariffs could be an effort to pressure the Canadian government to make concessions on dairy imports.

"It looks like a strategic play to resolve the dairy issue,"  Cherniak said.

The Canadian government's implementation of higher dairy import quotas under the USMCA recently came under fire by U.S. dairy producers. The Dairy Export Council and National Milk Producers Federation rebuked Canada's decision to allocate the majority of the import quotas to domestic producers, stating that such a move undermines USMCA.

The latest development in the trade wars underscores the need for companies to have plans in place for tariffs and other trade disruptions.

"Companies have to be resilient and have diversified supply chains," Cherniak said.

The U.S. first placed tariffs on Canadian steel and aluminum in 2018, leading to Canada responding in-kind. The countries agreed to drop the tariffs in May 2019

"This is the second time going to this rodeo," Cherniak said.

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Posted In: CanadaTrumpUSAUSMCAMarkets