#Canada #Montreal #Aluminium Association #Canadian Aluminium #Tariff Impact

US Tariffs on Canadian Aluminium: A Growing Concern

The Aluminium Association of Canada has voiced its firm opposition to the recent announcement by the United States, which imposes a staggering 50% tariff on Canadian aluminium. This decision poses a significant threat to the security and integrity of North America’s interconnected supply chain, according to industry leaders.

Economic Implications and Worker Impact

Jean Simard, the president and CEO of the Aluminium Association, describes the measure as misguided. He warns that a tariff of this magnitude will curtail demand for aluminium throughout the continent, adversely affecting production in both Canada and the U.S. The implications extend to vital sectors such as defense, construction, and automotive manufacturing, sectors reliant on a steady flow of aluminium for operations.

As quoted by Simard, “A $1,349.50 per metric ton tariff makes Canadian aluminium exports economically unfeasible.” This not only jeopardizes Canadian aluminium businesses but also endangers the livelihoods of workers on both sides of the border, potentially jeopardizing over 9,500 jobs in Canada alone.

Moreover, the Canadian industry remains committed to serving its U.S. customers, yet it faces the difficult decision of diversifying its trade towards markets like the European Union if these tariffs remain in place.

A Shift in Global Trade Flows

Simard cautions that the U.S. may inadvertently increase its dependence on aluminium from further, possibly less reliable sources such as China, Russia, and India. He added that this situation could endanger 125 years of collaboration and industrial cooperation between Canada and the U.S.

The Aluminium Association also emphasizes that the U.S. aims to boost domestic production capacity from 50% to 80%, yet using tariffs as a weapon creates uncertainty. Without a stable environment conducive to long-term, capital-intensive investments, the objective will be difficult to achieve. Even with higher domestic production, American manufacturers will still require significant imports of aluminium.

“Tariffs will only escalate costs for U.S. manufacturers and consumers amid ongoing inflation concerns,” Simard warned.

Energy Costs and Production Efficiency

Contextualizing the economic stakes further, aluminium production is highly energy-consumptive, and energy represents roughly 40% of manufacturing costs. Canada, with access to hydropower, showcases a low-carbon approach to aluminium production, offering secure and competitively priced products—an essential factor in today’s energy-sensitive economy.

With around 2.7 million metric tons of aluminium exported annually from Canada to the U.S., this represents the energy equivalent of 40 million megawatt hours—enough to power the state of Nevada or approximately 460 data centers. Maintaining this energy-efficient production is crucial, especially when environmental sustainability is at the forefront of global discourse.

Collaboration for Industrial Growth

The long-standing collaboration between Canada and the U.S. has been foundational in constructing a robust and integrated aluminium industry. This partnership is vital for supporting not just employment, but also national security concerns surrounding defence capabilities and economic stability.

The industry plans to sustain dialogue with U.S. stakeholders, including manufacturers, policymakers, and workers, acknowledging their reliance on cost-effective and responsibly sourced aluminium.

Addressing Real Trade Challenges

Rather than imposing punitive tariffs that risk destabilizing this mutual cooperation, both countries should focus on unfair trade practices by countries like China. The state-subsidized overproduction from such countries has disrupted the global aluminium market, driving local producers to the brink.

In response, Canada has initiated robust measures, including a commitment of $10.5 million over three years to establish a Market Watch Unit through the Canada Border Services Agency. These steps aim to combat circumvention tactics and enhance anti-dumping regulation, while lead initiatives in real-time aluminium traceability.

The Canadian government asserts that Canadian aluminium should not serve as a conduit for unfairly traded products; therefore, its continued exemption from U.S. tariffs is critical in upholding the North American aluminium value chain.

In conclusion, while the U.S. currently produces about 1 million metric tons of primary aluminium per year, its consumption reaches five times that number. Imposing tariffs may raise the costs for both U.S. manufacturers and consumers, particularly at a precarious economic moment. More constructive dialogue and cooperation, rather than division, will be essential to navigate the future of the aluminium market in North America.