The US aluminum industry remains divided regarding the impact of primary aluminum imports from Canada since they were exempted from the Section 232 tariffs one year ago.
The Aluminum Association said Friday it sent a letter to US Trade Representative Robert Lighthizer noting the continued importance of Canada's exemption from the tariff program for the US aluminum supply chain, according to a newsletter sent to association members.
"The US aluminum industry depends on a reliable source of Canadian primary aluminum, which has been a key part of the domestic supply chain and national security apparatus for decades," Aluminum Association CEO Tom Dobbins said in the letter, adding that current US smelters, even if operating at full capacity, are not able to meet domestic demand without secondary production and additional imports from reliable trade partners.
Data provided in the letter indicated that Canadian unwrought aluminum is currently imported into the US at an average rate of 186,369 mt/month in 2020, less than the average rate of 194,925 mt/month for the period between 2015 and 2017 and well below the peak rate of 209,587 mt/month in 2017.
"Imports of primary aluminum from Canada into the US are consistent today with levels prior to the implementation of Section 232 tariffs and below peaks in 2017," Dobbins said.
Dobbins said the association recognized recent shifts in Canadian aluminum production and trade flows during the second half of 2019 due to the restart of operations at the Aluminerie de Becancour smelter in Quebec after the resolution of a labor dispute. However, the new production from the smelter had essentially displaced imports from other countries in the Middle East and Asia, he added.
While Canadian imports were essential, Dobbins said Chinese overcapacity and Section 232 exclusions on imports from other parts of the world posed the biggest threats to the US aluminum industry.
APAA CALLS FOR TARIFFS ON CANADA TO RESUME
In a recent statement, the American Primary Aluminum Association said Canada should again be subject to the Section 232 aluminum tariff as surges of Canadian imports following the exemption have harmed US producers.
"The US primary aluminum industry is at a critical juncture," APAA CEO Mark Duffy said in early May. "Even before the pandemic, Canadian producers were flooding the US market, crippling pricing and jeopardizing the continued viability of the US industry. In the current environment, these problems are magnified."
The APAA said US imports of primary aluminum from Canada increased and exceeded domestic demand after the Section 232 exemption was granted in May 2019, rising from 119,000 mt in that month to 163,000 mt in June and nearly 230,000 mt in July.
The higher imports contradicted Canada's initial agreement to prevent shipment surges to the US at the time the exemption was granted, Duffy said.
"The Canadians allowed their exports to surge and have not kept their word," he said. "In light of Canada's failure to respect the terms of the agreement, the tariffs must be reinstated."
Duffy said Canada has exported the majority of its primary aluminum production to the US while subsidizing its own industry.
"At a time when the Canadian Government was advocating for the US to remove the tariffs, the Canadian Government was providing subsidies to its industry to increase production and capacity and restart one of its idled smelters," he said, in reference to Becancour. "These subsidies were in addition to Canadian subsidies already identified by the Organization for Economic Cooperation and Development."
Duffy said Alcoa's recent announcement to idle its smelter in Ferndale, Washington, exemplified the negative impact of rising Canadian aluminum imports on the US industry.
The APAA represents Century Aluminum and Magnitude 7 Metals.
Former Arkansas governor Mike Huckabee echoed the need for tariffs to be reinstated on Canada in a recent editorial, saying increasing aluminum imports from Canada were to blame for the loss of primary aluminum industry jobs in the US.
"The lifting of the tariffs and the Canadian subsidies effectively outsourced the 700 jobs in Washington state to Quebec," Huckabee said in a recent Washington Times opinion editorial. "Since the announcement of these subsidies, Canadian aluminum imports have surged over 70%, threatening thousands of American aluminum jobs in southern Missouri, New York, Kentucky and South Carolina."
