By Paul Vieira in Ottawa and Joshua Zumbrun in Washington
Canada said Friday it intends to slap its own tariffs on a range
of U.S. products that contain aluminum -- ranging from washing
machines to golf clubs to canned beverages -- in retaliation to
President Trump's move this week to aggravate one of the world's
largest and steadiest trading relationships.
The decision by Canada marks a return to the tense trade
rhetoric that nearly derailed negotiations toward a successful
conclusion of a new U.S.-Mexico-Canada agreement, which officially
came into force last month. The new pact was meant to replace a
North American trade treaty that Mr. Trump argued was the worst
trade deal ever made. The fight over aluminum, just weeks after the
new treaty kicked in, threatens to upend whatever stability and
trade peace USMCA was meant to introduce.
On Thursday, Mr. Trump said the U.S. would reimpose a tariff of
10% on some aluminum produced in Canada, arguing imports from
America's northern neighbor were surging into the U.S., and
depressing the U.S. industry. The administration justified the
tariffs using a national security provision and argued that a
depressed U.S. aluminum industry threatens U.S. national security.
The U.S. placed tariffs on Canadian aluminum and steel under this
provision in 2018 before agreeing to lift them after USMCA was
Canada said it would swiftly retaliate to the president's
decision. The country's Deputy Prime Minister, Chrystia Freeland,
unveiled Friday a list of U.S.-made items it could target. The
government plans to place tariffs on U.S. goods with a value of 3.6
billion Canadian dollars ($2.71 billion), or the equivalent of what
Canadian aluminum faces from the U.S. tariff.
"We will not escalate, but we will not back down," Ms. Freeland
told reporters in a teleconference. Products targeted contain
aluminum, and include items such as bars of the metal and consumer
goods like washers, refrigerators and golf clubs. The goods
targeted are meant to minimize damage to the Canadian economy, "and
to have the strongest possible impact in the U.S.," Ms. Freeland
said. "We hope when Americans look at this list, they will
understand why this dispute is a bad idea."
Before her announcement, business leaders and regional
politicians in Canada demanded that Ottawa retaliate forcefully.
"Canada has to be as aggressive as needed to get the Trump
administration's attention. We have to play this game," said Dennis
Darby, head of the Canadian Manufacturers and Exporters, a lobbying
Doug Ford, the premier of Ontario, Canada's most populous
province, said Ms. Freeland should slap tariffs on every available
item possible, and that citizens should skip over American products
and to opt to buy Canadian-made goods. "We will come back swinging
like the U.S. has never seen before," Mr. Ford said.
Canada has long been one of America's closest economic allies,
and the two nations enjoy a largely balanced trading relationship.
While the U.S. has large trade deficits with China and Mexico,
exports and imports of goods with Canada have been close to even at
about $300 billion a year in recent years. The relationship has
turned volatile during the Trump administration, which threatened
to shut off Canada's preferential access to the U.S. market unless
it agreed to new terms in a revised North American deal. Roughly
three quarters of all Canadian exports are U.S. bound.
The proposed Canadian tariff, also of 10%, is scheduled to kick
in 30 days after the U.S. starts issuing levies on Canadian
aluminum. The U.S. tariff is set to take effect on Aug. 16. Ms.
Freeland said Canadian officials will consult with industry and
regional governments, and those talks could result in changes to
the target list. A spokesman from the U.S. Trade Representative's
office didn't respond to a request for comment.
Mr. Trump said during a speech at a Whirlpool factory in Clyde,
Ohio Thursday the tariffs were necessary because "Canada was taking
advantage of us, as usual."
Ms. Freeland warned the tariffs threatened to cause the most
harm to U.S. consumers. "Any American who buys a can of beer or
soda, or a bike, will suffer," she said.
Canada is the fourth-largest aluminum producer in the world.
Most of the aluminum industry opposes the tariffs on allies like
Canada, and says that China is behind problematic trade practices
in the aluminum industry.
At the heart of the dispute is two ways of looking at aluminum
imports from Canada. The U.S. imports aluminum that is classified
into two primary types: raw aluminum without any added alloys, and
aluminum that contains the alloys.
Over the past year, total U.S. imports of Canadian aluminum have
been little changed at about $200 million a month. But there has
been a significant shift in the types of aluminum coming into the
U.S. Imports of unalloyed aluminum have climbed rapidly, while
alloyed aluminum has dropped. In justifying the tariffs, the U.S.
pointed to the surge in unalloyed aluminum.
The Aluminum Association, which represents most of the U.S.
aluminum industry, says the data has been cherry picked to make the
case for a surge. "All in all, it's the same volume of product
that's crossing [the border]," said Jean Simard, president of the
Aluminum Association of Canada. "It's just the balance of types [of
aluminum] is inverted for the time being."
The tariffs of 10% will only affect the unalloyed aluminum. Over
the past 12 months, the U.S. imported about $1.7 billion of such
aluminum from Canada.
--Kim Mackrael contributed to this article.
Write to Paul Vieira at email@example.com
(END) Dow Jones Newswires
August 07, 2020 15:03 ET (19:03 GMT)
Copyright (c) 2020 Dow Jones & Company, Inc.