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US drops tax on Canada aluminum, heading off retaliation
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US drops tax on Canada aluminum, heading off retaliation

Staff

On August 6th, 2020, the US announced a 10% tariff on Canadian aluminum, which was heavily criticized by aluminum manufacturers and companies from both sides. In response, Canada immediately announced its intention to strike back with $3.6 billion in countermeasures. The Trump administration thus backed down and rescinded the tariffs on September 15th, hours before Canada was planning to reveal its targets, easing tensions between the two countries.

Technically, the US has not fully closed its door on the tariffs yet. It has stated that it would examine the level of aluminum imports from Canada over a six-week period, thus punting any official decisions for the time being. However, given that Trump lost the election, it seems unlikely for the tariffs to be enforced any time soon since there is little reason for President Biden to pursue such an antagonistic relationship with America’s largest trading partner. Moreover, Deputy Prime Minister Chrystia Freeland has warned that Canada will pursue retaliatory measures once again if the tariffs get reimposed.

EXIMA News

So why did the Trump administration introduce the aluminum tariffs in the first place? Former President Trump had originally placed tariffs on aluminum imports for various countries back in 2018. He then lifted them in 2019 on Mexican and Canadian metals for the US-Mexico-Canada Agreement (USMCA) and to bring stability to North American trade. However, in August, Trump declared that he would reimpose them on Canada, stating, “Canada was taking advantage of us, as usual...The aluminum business was being decimated by Canada...Very unfair to our jobs and our great aluminum workers.”

Although this matter has been resolved for now, in the long term, both the US and Canada will have to find a way to support their manufacturing workers and businesses. Luckily, Myron Brilliant, the US Chamber Executive Vice President and Head of International Affairs, seems to be in favor of the tariffs being dropped and has stated, “What American manufacturers need now is certainty that these tariffs won’t make another reappearance...Setting aside these threats once and for all will allow American job creators to focus on economic recovery.”

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