The Aluminum Association applauded the July 1 implementation of the United States-Mexico-Canada Agreement (USMCA), saying the deal will support US aluminum manufacturers and secure the North American aluminum supply chain.
"USMCA's implementation is a historic achievement, and we greatly appreciate the efforts of the US, Canadian and Mexican governments in ensuring this trade agreement guarantees robust, fair and rules-based trade of aluminum and aluminum products between the three countries," Aluminum Association CEO Tom Dobbins said in a statement.
Dobbins said the USMCA's new "Rules of Origin" stipulation, which incentivizes the regional sourcing of aluminum for automotive parts and vehicles, would specifically drive demand for US aluminum manufacturers.
Some 97% of the US aluminum industry is involved in midstream and downstream production and processing, rather than primary smelting, according to Dobbins. Thus, the nation's industry relies on a secure and integrated North American aluminum supply chain, he added.
"These jobs depend on a mix of domestic and imported primary aluminum to meet demand, including from countries like Canada," Dobbins said. "As manufacturers transition to comply with USMCA, increased trade of aluminum within North America will benefit the US aluminum industry."
In addition to the USMCA, Dobbins said the North American trade partners must implement additional trade policies, such as aluminum import monitoring systems, to address China's aluminum overcapacity and its detrimental impact on the global aluminum market.
No update on Canadian aluminum import tariff
The Trump administration had yet to provide an update by July 2 on reports last week it would consider reimposing the Section 232 aluminum tariff on Canadian imports by July 1.
"President Trump struck a good deal to exempt Canada from the Section 232 tariffs last year, and that deal is still working for the US aluminum industry and the 690,000 American jobs it supports," Dobbins said. "The domestic aluminum industry will continue to thrive within a tariff- and quota-free North American region."
The Trump administration placed 10% tariffs on primary aluminum imports, along with 25% tariffs on steel imports, in 2018. Canada and Mexico were granted exemptions from the tariffs in 2019 as part of the USMCA negotiations.
Representatives of the US Chamber of Commerce, the Canadian Chamber of Commerce and the Mexican Business Coordinating Council expressed opposition to tariffs among the three trade partners with the USMCA now in effect.
"We also urge the governments to operate within the spirit of the agreement and refrain from the use of tariffs on national security grounds," the representatives said in a July 1 statement. "Our North American partnership does not threaten anyone's national security; on the contrary, it is a great strength for all three of our countries. Suggesting these tariffs may return only threatens critical cross-border supply chains."
Analysts with Commerzbank said US aluminum tariffs on Canadian imports would be counterproductive for the US industry.
"Years of decline in the US aluminum industry have left the US heavily reliant on imports: not even a quarter of domestic demand is met by domestic production," Commerzbank said in a July 2 research note. "We therefore believe that the US would be shooting itself in the foot if it were to impose import tariffs on Canadian aluminum."
