June 23, 2020
SENT VIA EMAIL
The Right Honourable Prime Minister Trudeau, P.C., M.P.
Dear Prime Minister,
Re: Threats of U.S. tariffs on Canadian aluminum suppliers
On behalf of Unifor’s members in the aluminum industry, I am writing to you to express our outrage over the totally unwarranted actions taken by the United States. The U.S. is threatening to re-impose 10% tariffs on Canadian aluminum exports unless the Canadian government agrees to restrict its export volumes through quotas. News reports today suggest the U.S. may impose these tariffs as early as July 1.
I urge you, Prime Minister, to reject any concessionary demands the U.S. requests of Canada on this matter.
The American Primary Aluminum Association (APAA) recently called on the U.S. federal government to end Canada’s exemption from Section 232 tariffs, arguing that a ‘surge’ in Canadian aluminum imports had caused aluminum prices to collapse, endangering the future viability of the U.S. industry.
These arguments are, quite frankly, preposterous and utterly divorced from reality. The numbers that the APAA used to present its case to Ambassador Lighthizer have been cherry-picked to obscure systemic weaknesses in the American aluminum industry as well as the central role that Chinese overcapacity and cheap offshore aluminum has played in lowering prices around the world. The COVID-19 pandemic has also played a key part in declining metal prices overall as global demand has fallen off a cliff.
What the APAA neglects to mention is that the U.S. aluminum industry has a domestic capacity problem that is leading American manufacturers to look elsewhere for their aluminum. Over the past 20 years, the number of aluminum smelters in the U.S. declined from 23 facilities to just 5 in 2017, mostly due to unstable energy supplies and global price volatility.
As a result, Canada is not unique when it comes to increasing its exports of aluminum to the United States. Imports of primary aluminum from non-Canadian sources by the U.S. more than doubled from 2011 to 2019, while Canadian levels by tonnage has only seen a marginal increase over the same period of time. Where we used to supply almost 50% of the United States’ aluminum demand in 2010, this number has since fallen substantially while non-Canadian sources have doubled to account for nearly 40% of American consumption (from 18% in 2010).
In other words, American producers are starved of aluminum and are understandably looking overseas to secure their supplies. And the U.S. administration has made it exceedingly simple to do so, especially when it comes to non-Canadian suppliers. Subsidized Chinese aluminum products have been granted billions of dollars in tariff exemptions, which ultimately lowers the demand for homemade primary aluminum. The U.S. administration also continues to overlook Mexico’s failure to implement a robust import monitoring system, which has allowed a flood of cheap offshore aluminum to sneak through the backdoor, most notably from Russia.
We also cannot overlook the fact that the U.S. aluminum industry itself is highly divided on the issue. Even the Aluminum Association of the U.S. – representing Alcoa Corp., Rio Tinto Group, and numerous aluminum parts manufacturers – has confirmed that Canadian imports are virtually unchanged from 2017 and that subsidized Chinese overcapacity is the real issue. In other words, the U.S. administration is opting to listen to a select group of industry lobbyists who have vested political interests in picking a fight with Canadians, rather than tackle the real problems plaguing the American aluminum industry.
Prime Minister, we must not allow these bullying tactics to succeed. I urge you to stand strong in the face of this misinformation campaign and reject any quotas that would disrupt the Canadian aluminum industry once again and lead to unnecessary layoffs. Strong reciprocal measures may be warranted and must be considered.
We must be firm in refusing the narrative that the U.S. is trying to peddle and demand that they address the real source of the problem – Chinese overcapacity and backdoor offshore aluminum – which has negatively impacted aluminum producers across the world.
Our members at Unifor and thousands of aluminum workers across Canada are counting on you, and are prepared to offer whatever assistance is necessary.