Ottawa will hit American aluminium products with $2.7 billion (Can$3.6 billion) in counter-tariffs, deputy prime minister Chrystia Freeland said on Friday, in response to ‘absurd’ US levies announced on Canadian goods.
US president Donald Trump said on Thursday that he was reimposing a 10 per cent tariff on Canadian aluminium, accusing Canada of flooding the US market with the metal.
‘In imposing these tariffs, the United States has taken the absurd decision to harm its own people,’ Freeland told a news conference.
The deputy prime minister said that Ottawa would hold 30 days of consultations with Canadian industry — which employs 10,000 workers — on which US items to target with tariffs.
A preliminary list published by the Canadian government includes soda and beer cans, bicycles, golf clubs and washing machines.
‘We will not escalate and we will not back down,’ Freeland said.
‘And we do hope that when Americans look at this list, they will understand why having a tariff dispute is a really bad idea.’
The deputy prime minister also commented that a trade war in the midst of the pandemic would be devastating to both countries, and urged the Trump administration to reconsider.
‘A trade dispute is the last thing anyone needs,’ she said. ‘It will only hurt the economic recovery on both sides of the border.’
The US tariffs, which take effect August 16, are in response to what Washington called a 27 per cent ‘surge’ in aluminium imports from Canada over the past year which ‘threatens to harm domestic aluminium production’.
‘I have determined that the measures agreed upon with Canada are not providing an effective alternative means to address the threatened impairment to our national security from imports of aluminium from Canada,’ Trump said in his proclamation.
Ottawa has long rejected the national security concerns coming from a close ally, and Freeland on Friday doubled down, calling the notion ‘ludicrous.’
Trump imposed punitive levies on imports of Canadian aluminium and steel in June 2018, and then relented as part of a free trade deal between the two countries and Mexico.
But he made the exemption conditional on Canada ensuring it would not ‘flood our country with exports and kill all of our aluminium jobs.’
‘Canadian aluminium producers have broken that commitment,’ Trump said on Thursday.
The Canadian aluminium industry disputed the US data, saying there was ‘no surge’ and that shipments actually fell in recent months.
It noted that the United States consumes six times more aluminium than it produces and so relies on imports.
Attacking Canadian suppliers, it said, would open the door to increased aluminium shipments from China.
Auto parts manufacturers said they would be hit particularly hard by increased aluminium costs.
Seventy per cent of aluminium in cars sold in North America must be sourced from the continent, under the new trade deal, known as the USMCA, which took effect on July 1.
Freeland said the United States and its neighbours should, under the new pact, be looking to ‘advance North American economic competitiveness, not to hinder it’.
‘At a time when its economy is suffering the deepest crisis since the Great Depression, any American who buys a can of beer or soda or a car or a bike will suffer,’ Freeland warned.
‘In fact, the very washing machines manufactured at the Whirlpool plant (in Clyde, Ohio) where the president made his announcement yesterday, will become more expensive for Americans and less competitive with machines produced elsewhere in the world as a result of these tariffs.’
Want stories like this in your inbox?
Sign up to exclusive daily email
More Stories from Tax