Despite new NAFTA, Trump slaps Canada with 10% aluminum tariff
Washington — Just one month after the replacement for the North American Free Trade Agreement took effect, the Trump administration is re-imposing a 10% tariff on aluminum imports from Canada.
In a proclamation signed Thursday, President Donald Trump said that he is setting aside a previous commitment to exclude Canada and Mexico from tariffs on foreign steel and aluminum he implemented in 2018 under a section of law that allows the president to unilaterally impose tariffs to protect the nation's security.
Trump said he is doing so because Canadian aluminum imports have "increased substantially in the twelve months following my decision to exclude, on a long-term basis, Canada from the tariff" imposed in 2018.
"Imports of non-alloyed unwrought aluminum from Canada during June 2019 through May 2020 increased 87 percent compared to the prior twelve-month period and exceeded the volume of any full calendar year in the previous decade," Trump said in the proclamation.
"Canada was taking advantage of us, as usual," Trump said during a speech in Ohio. "I signed it and imposed because the aluminum business was being decimated by Canada. Very unfair to our jobs and our great aluminum workers."
The 10% tariff on foreign aluminum, along with a 25% tariff on imported steel, were imposed by Trump under a section of federal law — Section 232 of the Trade Expansion Act of 1962 — that allowed him to place levies on foreign steel and aluminum under the guise of protecting the country from a national security threat.
The U.S. Mexico Canada Agreement requires automakers to produce cars with 75% of parts originating from the United States, Canada or Mexico — up from 62.5% — within five years to qualify for duty-free treatment. The U.S. was expected to include Canada and Mexico from steel and aluminum tariffs once the agreement was signed.
Detroit automakers declined to comment, deferring to the lobbying groups in Washington who decried the move to re-impose tariffs on Canadian aluminum by Trump.
“This move will place American Automakers at a competitive disadvantage with our global competitors, while hurting the hundreds of thousands of workers we employ at a time when the industry can least afford it," the American Automotive Policy Council, which lobbies for Ford Motor Co., General Motors Co. and Fiat Chrysler Automobiles NV, said in a statement. "Instead, we should let the USMCA’s groundbreaking steel and aluminum requirements achieve their intended effect, rather than reimposing tariffs on key trading partners.”
Autos Drive America, which lobbies for foreign-owned automakers, added: "New tariffs on aluminum imports from Canada will not aid in (economic) recovery and are not justified on national security grounds.
"We urge the immediate reconsideration of these tariffs so the industry can continue to ramp up production, make the significant adjustments required by the U.S.-Mexico-Canada Agreement and continue to provide competitively priced vehicles to American consumers," the group said.
The administration’s move to re-impose tariffs on aluminum from Canada is "a step in the wrong direction," said the U.S. Chamber of Commerce.
“These tariffs will raise costs for American manufacturers, are opposed by most U.S. aluminum producers, and will draw retaliation against U.S. exports — just as they did before," the Chamber said in a statement. "We urge the administration to reconsider this move."
Rufus Yerxa, president of the National Foreign Trade Council, which lobbies for open, rules-based international trade rules, added: "This is a misguided action and I urge the Administration to reconsider. It was taken without meaningful justification or investigation and will undoubtedly hurt more U.S. manufacturers than it helps, especially in the middle of an economic downturn.
"These tariffs undermine the new USMCA agreement," Yerxa continued. "We should not be imposing unilateral tariffs so quickly after its entry into force. Canada is our largest trading partner and one of our closest allies and this move will only hurt the relationship.”