According to MiningWeekly citing Bloomberg News, the United States needs to be cautious in deciding whether to impose tariffs on imported aluminum. If the United States imposes tariffs on imported aluminum, Canada will implement retaliatory measures.

The core of the tariff dispute is whether Canada’s primary aluminum imports have soared since the tariff was lifted in May 2019, and if so, it violates the recent trade agreement. The Canadian ambassador to the United States, Kirsten Hillman, said that due to the decline in demand during the epidemic, aluminum producers were forced to switch from deep-processing products to producing more non-alloy aluminum products or primary aluminum.

As the auto industry and other manufacturing industries resume production, demand for high value-added aluminum products will rebound. Hillman believes that in the next few months, the situation will return to what it was before, and it will take some time to observe. The two sides should negotiate in accordance with the normal form of trade.

Hillman said in a recent telephone interview that if the United States imposes import tariffs, Canada has no choice but to increase taxes on imported American products, and has not yet decided how to respond.

U.S. officials and company executives disagree on how to handle this matter. US Trade Representative Robert Lighthizer and some manufacturers complained that imports of primary aluminum from Canada have risen sharply. Alcoa, Rio Tinto, and a dozen other aluminum parts manufacturers and other members of the Alcoa Industry Association said that the current import volume has been comparable to the level before the Trump administration imposed tariffs under Section 232.

Hillman and Canadian officials have learned that the United States is considering a 10% tariff on imports of primary aluminum from Canada, as Bloomberg News reported last month.

Alcoa said in April that because aluminum alloy products are not as easy to store as primary aluminum, the company has shifted 20% of high value-added aluminum products to primary aluminum. Many other manufacturers around the world are also adopting similar practices to avoid the high cost of closing smelting capacity.

Hillman said it is wrong to take this approach when the economy is down, especially after the agreement signed by the United States, Mexico and Canada has taken effect. “The U.S. manufacturing industry recently hopes to achieve recovery by imposing import tariffs, which is a directional error.” Hillman said.