CPA’s Take: The president eliminated 232 tariffs on Canada for aluminum imports when signing the US MCA. Canada then wrongly thought it could get away with a renewed surge of imports.
WASHINGTON (AP) — President Donald Trump said Thursday that the United States is reinstating a 10% import tax on Canadian aluminum, raising tensions with an American ally just weeks after his trade pact with Canada and Mexico took effect.
[Paul Wiseman | August 7, 2020 | AP News]
Canada quickly vowed to respond in kind.
Trump originally imposed the tariffs on aluminum imports in 2018. He then lifted them last year on Canadian and Mexican metals to smooth the way for the US-Mexico-Canada Agreement, which replaced the North American Free Trade Agreement. The USMCA took effect July 1 and was expected to bring stability to North American trade.
Instead, Trump declared Thursday that he is reimposing the tariffs on Canada. Speaking at a Whirlpool plant in Ohio, the president said that Canada had promised that “its aluminum industry would not flood our country with exports and kill all of our aluminum jobs, which is exactly what they did.”
The Office of the U.S. Trade Representative said the tariffs will take effect Aug. 16.
Canadian Deputy Prime Minister Chrystia Freeland called the tariffs “unwarranted and unacceptable” and said Canada intends to swiftly impose dollar-for-dollar countermeasures.
“In the time of a global pandemic and an economic crisis, the last thing Canadian and American workers need is new tariffs that will raise costs for manufacturers and consumers, impede the free flow of trade, and hurt provincial and state economies,” Freeland said in a statement.
Trade lawyer Daniel Ujczo with Dickinson Wright PLLC in Columbus, Ohio, predicted that Canada will retaliate with tariffs of its own — unless U.S. and Canadian negotiators can reach a truce before the tit-for-tat import taxes begin.
Ujczo said the tariffs appear designed to win Trump election year support from voters in Ohio, an industrial state. But the tactic, he said, might not work during an economic crisis brought on by the coronavirus pandemic.
“Voters here in Ohio were willing to give the president a long leash on tariffs when the economy was strong” and Trump was using the sanctions as leverage to get a North American trade deal, Ujczo said. But “the dealmaker in chief already got his win with Canada and Mexico. These folks will see it as nothing more than a political tool in a time of economic hardship.’’
Aluminum imports from Canada rose sharply from February to March but have since leveled off and actually dropped 2.6% from May to June, according to the Aluminum Association trade group.
“Claims of a ‘surge’ of primary aluminum imports from Canada are simply not accurate,” said Tom Dobbins, the association’s president. He added: “Especially now, the U.S. should be focused on getting the manufacturing economy going again in the region – not picking battles with USMCA trading partners.’’
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Associated Press writer Rob Gillies in Toronto contributed to this report.
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