Aluminum Tariffs: Canada's SMEs Face Growing Challenges, Industry Urges Ottawa for Assistance

Strategic Insights -

Canada's small- and medium-sized aluminum processing companies are facing significant difficulties as a result of the ongoing trade war with the U.S., with more than 1,700 businesses in Quebec employing almost 30,000 people struggling to stay afloat. The industry is calling on the federal government to provide immediate financial assistance, including subsidies, forgivable loans, and programs to help them become more productive. Meanwhile, Canada's biggest primary producer, Rio Tinto PLC, downplays the impact of the tariffs, while industry experts caution that a truce between Canada and the U.S. may not occur without major concessions from Ottawa.

Key Takeaways:

  • More than 1,700 small- and medium-sized enterprises in Quebec process aluminum, employing almost 30,000 people.
  • SMEs are paying a higher price for aluminum sourced in North America compared to their competition in Europe.
  • Industry Minister Mélanie Joly's office did not respond to a request for comment on the issue.
  • Canadian SMEs are unable to redirect production to Europe due to the higher cost of aluminum and the competition from deep-pocketed technology companies.
  • The Aluminum Association reported a 4.4 per cent decrease in aluminum demand in the first quarter of the year.
  • A solution to the trade impasse could involve reducing the aluminum tariff on Canada to 20 per cent.
  • Canada's smelters last year sent approximately 2.9 million tonnes of primary aluminum to U.S. customers, accounting for 70 per cent of American imports.

Statistics:

  • 1,700: Number of small- and medium-sized enterprises in Quebec that process aluminum.
  • 30,000: Number of people employed in the aluminum processing industry in Quebec.
  • 35 per cent: New tariff rate on Canadian goods that are not covered by the United States-Mexico-Canada free-trade agreement.
  • US$321-million: Cost incurred by Rio Tinto PLC on its aluminum exports to the U.S.
  • 20 per cent: Proposed reduced tariff rate on aluminum to incentivize new investment in U.S. smelting capacity.
  • 70 per cent: Percentage of American aluminum imports that come from Canada.

Sources:

  • Niall McGee, "Aluminum Tariffs: Canada's SMEs Face Growing Challenges, Industry Urges Ottawa for Assistance"
  • Charlotte Laramée, AluQuébec president, interview with The author.
  • George Heppel, VP, commodities research with BMO Capital Markets, interview with The author.
  • Rio Tinto PLC statement
  • Aluminum Association press release
  • U.S. Treasury Secretary Scott Bessent statement