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From The Editor

USMCA is No Match For Provincial Concerns

By Dan Markham on
MCN Editor Dan Markham The metals industry celebrated the Entry in Force of the United States-Mexico-Canada trade agreement in July, ushering in a new period of peaceful coexistence of the metals communities in the continent’s three largest economies. 

The camaraderie, optimism and sense of a shared prosperity lasted approximately 15 minutes. 

Because shortly after USMCA became the law of the land, previous whispers grew into outspoken thoughts the U.S. might again pull out the heavy mallet of Section 232 to whack some alleged offenders in the metals trade. The target: primary aluminum suppliers in Canada. 

Spurred by the U.S. Primary Aluminum Producers Association, a trade group with more words in its name than members on its rolls, has asked the Trump administration for relief from Canadian primary aluminum production coming into the States. Canada is the United States’ largest supplier of the material. 

The group’s complaint caught the ear of U.S. Trade Representative Robert Lighthizer, who announced the administration was considering a revamp to the previously revamped Section 232 trade remedies. When President Trump put the 232 tariffs into effect in 2018, Canadian primary aluminum was subject to the 10 percent tariff on all foreign aluminum products. A year later, however, the U.S. reversed course and removed the levy from Canadian goods, egged on by the pleas of several members of the domestic supply chain.
Now, the threat of reimposing the tariffs has the support of the few remaining U.S.-based primary aluminum producers, though not many others in the supply chain. The Aluminum Association and Metals Service Center Institute have both come out against a change to the status quo. The Aluminum Extruders Council would like to see the administration go even further, striking down 232 in its entirety, claiming the fees, while well-intentioned, have been a drag on the overall nonferrous supply chain. 

Ultimately, the U.S. government may not heed the calls from domestic primary producers to reimpose 10 percent tariffs. Officials are unlikely, however, to remove one of the signature trade acts of the Trump administration, so 232 will remain in place until at least January. Additionally, until the issue is resolved, the dispute will only serve to rile an already unsettled nonferrous market, said Tina Allagh during a June webinar from Platts. Allagh is the senior managing 
editor for S&P Global Platts. 

Perhaps more important, the reignition of trade issues between the U.S. and one of its North American partners signifies the warm words and big smiles that accompanied the signing of the USMCA back in 2019 is no guarantee against minor dustups between the three countries, inside and outside the metals space. The pact is a fine pathway to maintain good trade relations and cooperation, but the road is never without its speed bumps, potholes and detours.