Quebec Says Canada Should Consider Aluminum Tax to Create Leverage Against US #CanadaFinance

(Bloomberg) — Quebec Premier Francois Legault said Canada should consider putting export taxes on products such as aluminum to create leverage in negotiations with President Donald Trump’s administration.

Most Read from Bloomberg

The leader of Canada’s second most-populous province said the country should retaliate against the US only if Trump actually implements tariffs against its northern trading partner. The president has threatened to do so on March 12, according to a proclamation issued by the White House.

If Trump follows through, “I think we should consider also putting exportation tariffs on products like aluminum where they really need us,” Legault told reporters in Washington. That would drive up costs even more for US manufacturers and builders that use the metal.

Trump signed an executive order this week to put 25% tariffs on all steel and aluminum imports, regardless of where they come from. Canada was the source of nearly 60% of US aluminum imports over the past year, according to data from the US Department of Commerce, and most of that is produced in Quebec.

Trump’s policy aims to bolster US production and create more manufacturing jobs. “It’s going to mean a lot of businesses are going to be opening in the United States,” Trump said Monday as he signed the measures. The new rates were authorized under Section 232 of the Trade Expansion Act, which gives the president broad authority to impose trade restrictions on domestic security grounds.

But US manufacturers’ competitiveness “will suffer” because of higher input costs, John G. Murphy, an executive at the US Chamber of Commerce, wrote in a social media post. There are about 10.7 million workers employed by businesses or entities that use aluminum that stand to be hurt, he said.

“The legal claim behind these Sec. 232 tariffs that aluminum imports from Canada ‘threaten to impair the national security’ of the US is wrong,” Murphy wrote.

The experience of Trump’s first attempt to use steel and aluminum tariffs in 2018 and 2019 suggests that much of the cost would be borne by US companies that need those products, Nathan Janzen, assistant chief economist of Royal Bank of Canada, said in a report. Those levies were 10% on aluminum and 25% on steel.

Janzen explained that it’s difficult for US producers to find alternative suppliers or substitutes, especially for highly specialized products. This is particularly true for aluminum. “Canada’s total 2024 trade balance in steel and aluminum products (those targeted with tariffs) was C$14 billion ($9.8 billion), with C$11 billion from the aluminum trade,” he said.

Story Continues