Quotas replacing tariffs on Canadian aluminum will only hurt the beer industry
When something sounds too good to be true, it probably is. That modern proverbial saying was on full display when the United States Trade Representative (USTR) announced it was lifting tariffs on non-alloyed, unwrought aluminum from Canada for the remainder of 2020. It was a surprising statement, not a negotiated deal, with many strings and convenient dates to address the highly unpopular tariff imposed on Canadian imports in August. First, the USTR says that it “expects” shipments of non-alloyed, unwrought aluminum from Canada to not exceed certain monthly volumes for the remainder of 2020. The monthly volumes are less than those from last year, and they start in September even though we are already halfway through the month. Second, the USTR says that if actual shipments exceed the specified monthly volumes for any month through the end of the year, it will retroactively impose the 10% tariff on all shipments made in that month. That is not all – shipments the following month would need to decline as well.
Notably, the United States will not decide whether actual shipments meet or exceed monthly volumes until six weeks after the end of any month during this four-month period. For example, USTR will not evaluate September imports until mid-November, conveniently after Election Day.
Aluminum from Canada is critically important to the United States. In 2018 when the Department of Commerce released its report on 232 tariffs, it stated, “Canada, which is highly integrated with the U.S. defense industrial base and considered a reliable supplier, is the leading source of [aluminum] import” to the United States. Arbitrarily limiting the amount of aluminum the United States imports from Canada could impact our national defense.
Tariffs are also unpopular, particularly as they apply to our closest ally and trading partner, Canada. The tariffs hurt end-users and skew the price everyone pays for aluminum. If, as the USTR says, shipments of non-alloyed, unwrought aluminum from Canada are naturally expected to fall well below 2019 imports, that does not say much about the Administration’s hopes for manufacturing during the last four months of 2020. If this decision is just a reaction to criticism of the tariffs by governors of certain key battleground states, it reveals, clear as day, that pure politics, not sound trade policy are at play.