As Trump takes aim at foreign metal, Canada argues for exemption

TORONTO – The biggest steel and aluminium exporter to the US is hopeful of being left out of a Trump administration crackdown on foreign shipments.

The US Commerce Department didn’t recommend giving Canada a pass when it outlined possible tariffs and quotas on Friday, but it did single out its northern neighbours' importance to the US aluminium industry. Canada accounts for about half of the US’s almost five-million-metric-ton aluminium deficit, and domestic smelters couldn’t fill that kind of void quickly, ING Bank strategist Oliver Nugent wrote in a note to clients Monday.

For steel, options under consideration include a heavy-handed approach on shipments from 12 countries including China and Russia while allowing for exemptions for allies like Canada and Japan.

“If any country should be granted an exemption, I put my bet on Canada,” Aluminium Association of Canada president Jean Simard said by telephone.

The neighbouring countries are key allies and partners, with steel and aluminium industries that are highly integrated and supportive of North American jobs and manufacturing supply chains, Adam Austen, a spokesperson for Canada’s Foreign Affairs Minister Chrystia Freeland, said in emailed statement Friday. Canada will vigorously stress the importance of that relationship as it awaits Trump’s final decision, Austen said.

US aluminium producer Alcoa said Friday that Canadian metal should be exempt. Rio Tinto Group also sees room for Canada to be excused.

Trump has until mid-April to decide on any potential action and could still seek negotiations with producers. The president last year ordered the Commerce Department to probe whether imports of steel and aluminium imperil US national security, invoking the seldom-used Section 232 of the 1962 Trade Act, which allows the president to impose tariffs without congressional approval.

Imposing tariffs or quotas on metal imports comes amid North American Free Trade Agreement talks, in which the US and Canada have traded regular barbs, accusing each other of not being flexible. The next round of Nafta talks begins in Mexico next week.

“Certainly, any amount of poison being injected by the system makes it a lot more difficult to have a healthy continental economy afterward,”  Perrin Beatty, head of the Canadian Chamber of Commerce, said by telephone Friday. “Everyone loses” if those recommendations are put in place, he said.

The aim of the tariffs is to boost US output to at least 80% of capacity by cutting steel imports by 13.3-million metric tons and aluminium imports by 669 000 tons. But that risks a chain reaction in which restrictions on US imports encourage other nations to impose duties. Some US lawmakers and fabricators have warned that trade protections would push up costs for domestic manufacturers.

“One hopes that the administration will look at this carefully and will recognise that it’s not in any body’s interest to precipitate tit-for-tat between Canada and the US on this,” Beatty said.