According to Bloomberg's report on August 26, an industry organization representing aluminum producers in the United States and Canada has accused the two countries of stopping the mutual imposition of aluminum tariffs and instead forming a common front to deal with competition from China.
The above remarks came as the trade dispute between the United States and Canada intensified. Washington maintains a 50% tariff on Canadian aluminum, while Ottawa counters with a 50% tariff on American imported goods. The two countries had been negotiating a trade agreement that would have potentially reduced U.S. tariffs on Canadian aluminum products, but the negotiations fell apart at the last minute.
These industry organizations warn that this dispute could undermine investment and disrupt a highly integrated supply chain in North America. Approximately 60% of the United States’ demand for primary aluminum relies on imports, and Canada is the largest foreign supplier to the United States, far exceeding other countries.
Canadian Aluminum Association president Jean Simard called for the establishment of a "Fortress North America." This initiative would ensure free trade in aluminum products within North America, while setting barriers to aluminum products from non-market economies and cracking down on brokering activities.
He said that even if the United States builds new smelters and restarts production of discontinued facilities, it will still continue to rely on imported primary aluminum. Simal said during a panel discussion at the CRU/AMU Aluminum Industry Summit in Atlanta, Georgia, on Tuesday: “The United States cannot do it alone.”
American Aluminum Association CEO Chuck Johnson also supports regional solutions. He acknowledged that the 50% tariffs imposed by U.S. President Donald Trump under the '232 Act have created winners and losers in the United States.
He stated that, in the short term, U.S. tariffs are “very beneficial” for domestic aluminum producers, but they harm companies that have to pass on these additional costs to their customers, such as aluminum foil manufacturers. Conflicts of interest lead to disagreements within the aluminum industry regarding what the next steps should be. Johnson said, “The entire industry is exhausted, as policy goals keep changing.”
Changing trade policies also discourages businesses from investing in capital, which may make it more complicated for Washington to revitalize the U.S. domestic manufacturing industry. Johnson said that this uncertainty makes it harder for aluminum producers to make long-term investment commitments.
He stated that while the United States is seeking preferential trade arrangements with Canada and Mexico, it may ultimately be necessary to make compromises. "As a region, we must find a common path forward."
Ximal stated that this dispute may distract attention from the perceived greater threat to the aluminum industry, namely the so-called overcapacity in China, and the possibility of Chinese aluminum products entering the North American market through third countries. As Chinese companies expand their overseas production, including increasing capacity in Indonesia, Canada is reviewing its free trade agreements to assess potential risks related to transshipment trade.
Simal said that the United States and Canada should not set trade barriers on each other, but rather 'work together to make the pie bigger'.
The Chinese side has repeatedly emphasized that a few countries, due to geopolitical considerations, politicize normal economic and trade issues, and forcefully exaggerate the so-called 'overcapacity' problem in China. They use this as an excuse to intensify protectionist measures.
