Aluminum firms in Canada see death of U.S. sales as tariffs bite

The Canadian aluminum industry is urging Prime Minister Mark Carney’s government to implement tariff-rate quotas on American aluminum goods. Photo by Christinne Muschi/Bloomberg

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Aluminum products are among the items the U.S. included for 50 per cent levies imposed on Tuesday as part of its escalating dispute with Canada following last month’s breakdown in trade talks. The latest move ends tariff exemptions for some goods made with the lightweight metal, leaving them with a 100 per cent levy when added to the 50 per cent U.S. tariff rate imposed on foreign supplies last year.

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For companies such as Apex Aluminum Extrusions Ltd., President Donald Trump’s move makes their Canadian-made products uncompetitive compared to their American counterparts. The British Columbia-based manufacturer, which makes aluminum parts for the construction industry and data centres, gets about 40 per cent of its sales from the U.S.

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“Our U.S. business is dead,” chief financial officer Darren McQueen said in an interview. “There will be nothing more crossing the border.”

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The painful new metal tariff was part of an annex published by the White House on Sept. 8 at the same time as the Trump administration announced it would ban some Canadian products including alcohol and dairy, escalating the neighbours’ trade war.

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AluQuebec, an industry group that advocates for aluminum firms across Quebec’s supply chain, estimates that more than $600 million in Canadian annual exports to the U.S. are associated with the newly targeted products, which include aluminum bars and pipes. That’s roughly a fifth of all Canadian shipments of non-primary aluminum products to the U.S., it said.

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“This latest round of price hikes significantly changes the landscape for small- and medium-sized enterprises in the aluminum sector, particularly those that produce extrusions,” AluQuebec head Charlotte Laramée said in an emailed statement. “With tariffs that could reach 100 per cent, the very ability of many of our companies to continue exporting to the United States is being called into question.”

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Canada accounted for almost half of all U.S. imports of aluminum products for domestic consumption last year, according to the U.S. International Trade Administration. The vast majority of the country’s aluminum production comes from Quebec, with the French-speaking province host to major producers including Alcoa Inc. and Rio Tinto Group.

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The U.S. trade restrictions aren’t hitting all parts of Canada’s aluminum industry equally. Producers of primary aluminum have profited by supplying the metal to the U.S., which faces tight supplies, limited domestic output and the highest prices in the world. Yet Canadian firms involved in processing and manufacturing are saddled with higher costs tied to tariffs that may be difficult to fully pass on to their customers.