Aluminum producers in Canada cash in on U.S. tariff exemption

July 24, 2019

Canada’s exemption from U.S. tariffs on imports of aluminum metal has boosted earnings at the Canadian operations of companies such as Rio Tinto and Alcoa, but has not cut costs for U.S. consumers.

In May, the United States lifted the Section 232 tariff of 10% imposed on Canadian imports of aluminum, a vital ingredient for auto makers, drinks firms and military equipment companies.

Aluminum costs for U.S. consumers are the benchmark price on the London Metal Exchange at around $1,810 a tonne plus the physical market premium, around $400 a tonne.

Analysts say $192 of the premium is the tariff non-exempt producers pay.

“About 70% of U.S. aluminum demand can be met without paying import duties, yet 100% is pegged to the duty payable,” said Citi analyst Oliver Nugent, adding the bank’s estimate for U.S. aluminum demand this year was 5.57 million tonnes...

This was excerpted from the 23 July 2019 edition of Reuters Canada.

Topic(s)

Trade Agreements

Information source

Canadian News Channel

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