For the second time in a brief few years, cross-border trade of aluminum between Canada and the United States has been caught in the cross-hairs of US trade policy.
On August 6, 2020, the Trump Administration announced its intention to re-impose a 10% tariff on non-alloyed unwrought aluminum imported into the United States from Canada. Citing significant increases in Canadian imports of non-alloyed unwrought aluminum to the United States, President Trump ordered the re-imposition of the tariffs on the basis that imported Canadian aluminum was a threat to US national security under section 232 of the Trade Expansion Act of 1962. The US tariffs that were announced are only applicable to non-alloyed unwrought aluminum articles from Canada included in the previous Presidential Proclamation 9704. In brief, the newly announced tariffs only apply to non-alloyed unwrought aluminum articles (HTS 7601.10). The other aluminum articles that were previously subject to the tariff will not be subject to the newly announced 10% tariff. The US tariffs are set to come into force at 12:01 a.m. EDT on August 16, 2020.
In response, Canada swiftly vowed to impose counter-measures matching the US tariffs dollar for dollar. The Canadian counter-measures were announced on August 7, 2020, and provide a comment period for Canadian businesses until September 6, 2020. The counter-measures include various aluminum goods, but also refrigerators, washing machines, bicycles, golf clubs, among other items. The Canadian counter-measures will enter into force on September 16, 2020. Canadian businesses involved in the import/export or sales of listed goods or goods that contain such products should review their supply chains and consider making a submission to the Department of Finance to advocate for the removal or exemptions of goods that would significantly impact their business.
The initial May 17, 2019, Joint Statement by Canada and the United States on Section 232 Duties on Steel and Aluminum which removed the initial steel and aluminum tariffs provided for Canada and the US to establish an agreed-upon monitoring process, and included the possibility of engaging in consultations in the event of a surge beyond historical volumes of trade. Notably, the removal of the 232 tariffs was a key aspect for Canada to move forward with the entry into force of the USMCA, which included two side letters: one in relation to autos and another on future 232 measures.
The initial US tariffs were the subject of nine WTO disputes, and four additional disputes requested by the United States in relation to counter-measures imposed in reaction to the tariffs. While certain cases challenging the US measures were settled or terminated as certain countries were exempted from the tariffs, this was not the case for all disputes, some of which are expected to be rendered this fall. While such decisions may provide guidance and certainty on key issues such as the application of US national security claims in relation to the tariffs, they are unlikely to resolve any issues relating to the present round of tariffs, which may result in further legal disputes both domestically in Canada and the United States as well as at the WTO.
Dentons is well positioned to assist in these matters and has advised extensively on the previous US steel and aluminum tariffs. For any inquiries on submissions to the Department of Finance or the aluminum tariffs generally, please contact Paul Lalonde or Sean Stephenson.