Canmakers fear plans for tariffs on aluminium from Canada

US canmakers have urged the Trump administration not to reimpose tariffs on imports of aluminium from Canada, arguing that it would do immense damage and cost jobs in the beverage can sector.

In a letter to US Trade Representative Robert Lighthizer, leaders from the Can Manufacturers Institute (CMI), The Aluminum Association, Beer Institute and American Beverage Association called on any plans for the reintroduction of Section 232 tariffs or quotas on Canadian imports of aluminium to be abandoned.

Following the introduction of import tariffs of ten per cent on aluminium and 25 per cent on steel in July 2018, Canada and Mexico was exempted in 2019 following lobbying by the industry. However, the American Primary Aluminum Association is reported recently to have called for the tariffs to be reintroduced on Canada and canmakers fear that could happen as early as July.

If tariffs are reintroduced, it could strain ties and possibly incite Canadian retaliation just as a revised North American trade deal comes into effect on 1 July, it has been reported.

“The entire supply chain agrees: imposition of a tariff or a quota on importation of aluminium from Canada would be very bad for the US aluminium industry, US manufacturing businesses and the economy generally,” the letter stated.

“In manufacturing, you need a stable and predictable supply chain. An open border for trading of aluminium between the US and Canada enhances US manufacturing. The US has imported more primary aluminium from Canada than from any other country for decades. A large percentage of those imports are for the benefit of the US aluminium industry itself. Those imports are also critical to many US companies that are important to our economy overall.

“Constraints on imports of aluminium from our country’s closest ally, whether in the form of a quota or a tariff, will significantly increase the cost of aluminium in this country. This is particularly troublesome given that most of the US aluminium industry opposes such move and US manufacturing is in the difficult position of trying recover from the negative effects of the very fluid situation that is the Covid-19 pandemic.

“We encourage you to avoid penalising US manufacturing and the US aluminium industry in this manner.”

The letter was signed by Jim McGreevy, chief executive of the Beer Institute, Robert Budway, president of the CMI, Tom Dobbins, chief executive of The Aluminum Association and Amy Hancock, executive vice president and general counsel for the American Beverage Association.

The issue between Canada and the US is now at an impasse, said Uday Patel, senior research manager for aluminium markets with London-based Wood Mackenzie, when talking to The Canmaker.

“If the 10 per cent duty on Canadian primary metal is to be re-imposed there is the question of how long it will take before it can actually come into force,” said Patel. “The original imposition took a few months before it became live.” However, he conceded that the tariffs could be introduced by an executive order.

“The impact, all things being equal, is to raise US premia for primary metal and so add to raw material costs for US consumers at a time when underlying demand is weak – except in canstock,” Patel added.

“For US can sheet producers this could lead to greater imports of can sheet, which are not subject to section 232. For Canadian smelters, they could divert more output to the EU under the Free Trade agreement, which would then depress premia in Europe and possibly lower raw material costs for European can sheet and canmakers.”