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New US-Canada Aluminum Tariffs to Hurt Shipbuilders

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By The Maritime Executive 08-07-2020 07:06:53

The United States and Canada are renewing their trade war over aluminum, a move that will directly impact the shipbuilding industry. While there is no specific information on how much aluminum is used by the shipbuilding industry, in 2016 Aluminum Insider estimated that shipbuilding used more than 1 million tons annually primarily of rolled aluminum.

The latest trade war began on August 6 when President Donald Trump issued a proclamation saying that he was reinstating a 10 percent tariff on Canadian aluminum products effect August 16. Citing national security concerns, Trump said that efforts to curb Canadian imports had not been effective and as such the U.S. needed to reimpose the tariffs.  

Canada responded saying that it would not escalate the dispute but was placing an equal amount of tariffs on American made aluminum products. Canada plans to impose US$2.7 billion worth of tariffs on U.S. products effective September 16. Canada said it would spend the next 30 days developing a broad list of American products to be included in the retaliatory tariffs.

“We’re incredibly disappointed that the administration failed to listen to the vast majority of domestic aluminum companies and users by reinstating Section 232 tariffs on Canadian aluminum,” said Tom Dobbins, president & CEO of the Aluminum Association in the United States. “After years of complex negotiations and hard work by government, industry and other leaders across North America to make the U.S.-Mexico-Canada Agreement (USMCA) a reality, this ill-advised action on a key trading partner undermines the deal’s benefits at a time when U.S. businesses and consumers can least afford it.”

President Trump began the current trade dispute in 2018 saying, “that aluminum articles were being imported into the United States in such quantities and under such circumstances as to threaten to impair the national security of the United States.”  The first 10 percent tariff went into effect in 2018, but a year later Trump said that a new agreement had been reached with Canada on a range of measures expected to allow imports of aluminum from Canada to remain stable at historical levels without meaningful increases. He noted that the agreement included steps to monitor for and avoid import surges.

In announcing the new tariffs, Trump accused Canada of dumping aluminum into the U.S. saying that imports of non-alloyed unwrought aluminum from Canada rose 87 percent in the twelve months ended May 2020. Further, he contends that the import levels in June 2020 reached the highest monthly totals since the administration began its efforts to reduce the imports of these Canadian aluminum products.

Canada responded by calling the tariffs unnecessary and saying the moves would only hurt American industry and consumers.

The Trump administration’s latest trade war moves come barely a month after the administration’s signature U.S.-Mexico-Canada Trade Agreement went into effect. Replacing the previous NAFTA trade agreement, the USMCA had been hailed as a major step to improving trade between the countries.

The U.S. Chamber of Commerce immediately warned that bringing back tariffs would hurt a broad range of American manufacturers and industries. Businesses responded saying that the tariffs would drive up costs to consumers and make American products more expensive reducing their competitiveness in the global economy.

Relations between the neighboring countries have been strained by a series of efforts undertaken by the current U.S. administration. So far, the Trump Administration has not commented on Canada’s retaliatory efforts