Due to the coronavirus pandemic bringing the US economy to a sudden standstill, many domestic producers found themselves in a slump. American aluminium producers have lost a significant portion of their demand which in turn caused sales and prices to drop. As a means of easing the financial downturn for aluminum manufacturing companies in the US, the Trump administration is strongly considering reimposing tariffs on aluminium imported from Canada.
According to people familiar with the matter, Canada has been given the option to restrict exports of its aluminum, and if it fails to do so the US plans to announce a 10% tariff re-imposition on Friday. If such a tariff is implemented, it will become valid in the beginning of July 2020. According to U.S. Trade Representative Robert Lighthizer, several US aluminum manufacturers have recently been struggling to make ends meet in wake of a sudden surge of imports from Canada and Mexico.
However, according to the Canadian Deputy Prime Minister’s press secretary Katherine Cuplinskas, Canada’s aluminum exports to the US do not cause harm to the country’s market, and the free flow of goods between the US and Canada is beneficial for economic growth on both sides of the border. In the meantime, some of the main US aluminum producers are also in a disagreement over whether or not tariffs are necessary.
The Aluminum Association of the U.S affirmed that the level of aluminum imports has remained unchanged since 2017, and free trade is supported between countries that trade freely, such as Canada. However, the American Primary Aluminum Association reinstated the call for a 10% tariff imposition, stating that the apparent increase in Canadian imports has caused the price of aluminium in the US to fall.
Information for this briefing was found via Bloomberg and Reuters. The author has no securities or affiliations related to this organization. Not a recommendation to buy or sell. Always do additional research and consult a professional before purchasing a security. The author holds no licenses.