/U.S. plan to slap tariffs on Canadian aluminum faces a powerful adversary — the beer lobby
U.S. plan to slap tariffs on Canadian aluminum faces a powerful adversary — the beer lobby

U.S. plan to slap tariffs on Canadian aluminum faces a powerful adversary — the beer lobby


As the Trump Administration considers reimposing a 10 per cent tariff on Canadian aluminum, it finds itself at odds with a powerful constituency — beer manufacturers.
On Thursday, Jim McGreevy, chief executive of the Washington, D.C.-based Beer Institute, joined by executives from the American Beverage Association, the Can Manufacturers Institute, and the Aluminum Association, expressed their strong opposition to a tariff or even a quota on Canadian aluminum, in a letter to U.S. Trade Representative Robert Lighthizer.
“Constraints on imports of aluminum from our country’s closest ally, whether in the form of a quota or a tariff, will significantly increase the cost of aluminum in this country,” the executives wrote.
Earlier this month, McGreevy, who represents beer producers and importers, wrote another letter to Lighthizer, explaining that more than 60 per cent of beer in the U.S. is packaged in aluminum cans or bottles. Imposing tariffs or quotas on Canada, “a key player” in the supply chain, could affect brewers’ ability to bring beer to market.
The potential for the U.S. to reimpose tariffs on Canadian aluminum, known as Section 232 tariffs, is attracting fresh attention after Lighthizer testified to the U.S. Senate Finance Committee last week that he was concerned about a “surge” in Canadian aluminum exports to the U.S., and said the two countries were discussing the matter.
Lighthizer’s testimony has raised concerns that U.S. President Trump is considering an executive order that would reintroduce 10 per cent tariffs on Canadian primary aluminum imports, though the timing and likelihood remains unclear.

The current trade relationship with Canada is simply not a cause for concern within the aluminum industry

Aluminum Association

“A couple of days ago based on what I was hearing, I would have probably said it’s likely to get imposed. Now it’s closer to a coin flip,” said Bruce Heymann, former U.S. ambassador to Canada under President Barack Obama, who is following the matter.
Heymann said that the political calculus of imposing a tariff now is mixed on the eve of the Canada-U.S.-Mexico Trade Agreement, which takes effect July 1. While it provides a way for President Trump to say he is protecting American workers, it also undermines the spirit of the trade agreement.
Also on Thursday, the Virginia-based Aluminum Association sent a letter to Lighthizer saying that U.S. primary aluminum producers can only supply one-third of the material to meet the country’s aluminum demand.
The letter was signed by more than 15 CEOs representing different segments of the aluminum industry, from aluminum foil producer Reynolds Consumers Products to primary producer Alcoa Corp., which has operations in both Canada and the United States.
The association argued that the two countries have an integrated aluminum supply chain, and that tariffs or quotas would threaten the availability and cost of the material, and ultimately hurt American workers. As much as 97 per cent of jobs in the U.S. aluminum industry are in mid- and downstream processing and depend on Canadian aluminum, the letter said.
“The current trade relationship with Canada is simply not a cause for concern within the aluminum industry,” the group said. “The integrated North American aluminum supply chain has been a crucial element of the U.S. aluminum industry’s ability to invest and grow over the past several decades.”
The American Automotive Policy Council, which represents automakers including Ford Motor Co. and General Motors Co., also opposes the tariff, writing in a press release Thursday that the tax would hurt “hundreds of thousands of workers at a time when the industry can least afford it,” as it absorbs the economic fallout from the coronavirus pandemic.
But Chicago-headquartered Century Aluminum Co. and Missouri-based Magnitude 7 Metals LLC are waging an “Aluminum Now” campaign through their own trade group, the American Primary Aluminum Association.
On the ‘Aluminum Now’ website, the group says that “Illegal subsidization of domestic aluminum production — perpetuated by Russia, the Middle East, China and other bad actors” has caused the price of aluminum to drop around the globe, and by extension, forced U.S. smelters to close and lay off thousands of workers.
Neither Century, Magnitude 7 nor the APAA provided comment for this article.
U.S. tariffs on Canadian aluminum are not a new issue. They were first applied to all aluminum imports into the U.S. in March 2018, but were lifted for Canada in May 2018 under an agreement that included a provision to monitor and limit exports. Not long afterwards, the U.S., Canada and Mexico struck a new trade deal to replace the North American Free Trade Agreement.
The $13-billion Canadian aluminum industry, primarily in Quebec and British Columbia, relies heavily on the U.S., with 83 per cent of its exports heading stateside in 2018.
Katherine Cuplinskas, press secretary to the office of Deputy Prime Minister Chrystia Freeland, said in a statement: “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.”
One point of contention is whether Canadian imports have in fact “surged,” as Lighthizer said.
The APAA, as part of its ‘Aluminum Now’ campaign, says that Canadian aluminum exports to the U.S. have surged 80 per cent since tariffs were lifted.
But others have said the increase is because one smelter in Quebec, in which the workers had been locked out in a labour dispute from January 2018 to July 2019, has now come back online, and because tariffs had previously deterred exports to the U.S.
“U.S. imports of primary aluminum from Canada today are consistent with levels prior to the implementation of Section 232 tariffs and below peak volumes experienced in 2017,” the Aluminum Association argued in its letter.
Regardless, the threat of a tariff has already caused aluminum prices in the U.S. to skyrocket.
The trade magazine, Metal Miner, reported on Friday that “The Midwest premium, after nearly a year of steady decline to around US$170 per ton… has ripped back up to US$300 per ton where it was this time last year.”
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