02-08-2025
Quebec's aluminum processors press Ottawa for support as trade talks continue
The head of aluminum products and processing group AluQuébec is urging Ottawa to provide immediate financial assistance to the industry after Canada failed to reach a trade deal by U.S. President Donald Trump's Friday deadline.
The two countries appear far from reaching a pact. On Thursday night, Mr. Trump followed through with his threat of hiking the tariff on Canadian goods that are not covered by the United States-Mexico-Canada free-trade agreement to 35 per cent from 25 per cent if a deal was not reached by Aug. 1. U.S. levies on the aluminum sector, which were imposed in March, and doubled to 50 per cent in June, remain in place.
Mr. Carney had cautioned earlier this week that the timeline to reach an agreement could be pushed out, and that negotiations would continue until Canada got the best deal for Canadians.
With never-ending tariff drama, the Canadian economy limps along
Charlotte Laramée, president of AluQuébec, which represents small- and medium-sized aluminum products companies, said Friday she understands why Canada has not yet reached an agreement with the U.S.
'We know that the Government of Canada wants to have the best deal possible, even if it will take longer,' said Ms. Laramée in an interview.
'But the longer it is, the more difficult it is for the companies.'
There are more than 1,700 small- and medium-sized enterprises in Quebec that process aluminum, employing just under 30,000 people.
While primary aluminum producers have been able to redirect a significant portion of their production to Europe, SMEs aren't in a position to do that, said Ms. Laramée. That's because they are paying a higher price for the aluminum sourced in North America compared with their competition in Europe.
Ms. Laramée is asking Ottawa to provide subsidies, forgivable loans and to introduce programs to help SMEs become more productive.
The federal government has made loans available to large aluminum companies affected by the trade war through its Large Enterprise Tariff Loan facility. To qualify, companies must have at least $300-million in annual revenue, a threshold that excludes small- and medium-sized companies.
Industry Minister Mélanie Joly's office did not respond to a request for comment.
John Rapley: Beneath the bluster, the U.S. is losing the trade war
As Canada's SMEs outline the difficulties they're facing as a result of the aluminum tariffs, Canada's biggest primary producer, Rio Tinto PLC, is playing down the impact. In a statement earlier this week, London-based Rio said that while it had incurred US$321-million in costs on its aluminum exports to the U.S., the higher price of the commodity was a major offset.
In a conference call with analysts on Wednesday, chief executive officer Jakob Stausholm also said it wasn't his place to kick up a stink over the levies.
'Do we like 50-per-cent tariffs on aluminum? Not really. But it's not for us to make much statements around that,' he said.
Rio Tinto declined requests for an interview.
While U.S. Treasury Secretary Scott Bessent indicated earlier this week that the U.S. is willing to work with Canada on the aluminum tariffs, Mr. Trump has appeared to be less flexible.
'Bessent is showing the carrot and Trump is showing the stick,' George Heppel, VP, commodities research with BMO Capital Markets, said in an interview.
A sensible solution would be for the U.S. to reduce the aluminum tariff on Canada to 20 per cent, said Mr. Heppel. That would still incent new investment in U.S. smelting capacity, but wouldn't be high enough to overly punish the U.S. manufacturing sector.
The U.S. leans heavily on Canada to satisfy its aluminum demand for industries, including aerospace, defence, construction and automotive. Canadian smelters last year sent approximately 2.9 million tonnes of primary aluminum to U.S. customers, accounting for 70 per cent of American imports.
Mr. Heppel doesn't see a truce between Canada and the U.S. occurring without major commitments made by Ottawa.
'For the Trump administration to publicly roll back aluminum tariffs in a big way, there would have to be the right story behind it, and it would have to involve some sort of concession from the Canadian side,' he said.
One of Mr. Trump's biggest asks has been for foreign companies to increase their smelting capacity in the U.S. Since the aluminum tariffs were first implemented in March, Dubai-based Emirates Global Aluminium has been one of the few to commit to building a new smelter in the U.S.
Mr. Heppel said that aluminum companies would face steep competition for hydro contacts with extremely deep pocketed technology companies such as Microsoft that are building AI data centres, a factor that significantly dampens the investment case.
The Washington-based Aluminum Association reported this week that aluminum demand in the United States and Canada, representing shipments by domestic producers plus imports, fell by 4.4 per cent in the first quarter from a year earlier as the trade war rages on.
'We encourage the U.S. and Canada to continue a dialogue and come to a trade agreement that includes tariff alignment throughout North America to ensure both fair trade in the region and the steady flow of aluminum for U.S. producers,' Aluminum Association chief executive officer Charles Johnson said in a statement.
With a report by Jeffrey Jones
