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UPDATE 4-Trump reimposes tariffs on raw Canadian aluminum, Canada promises retaliation

Thu, 6th Aug 2020 22:27

(Adds Rio Tinto comments)

By Jeff Mason and Julie Gordon

CLYDE, Ohio/OTTAWA, Aug 6 (Reuters) - President Donald Trump
on Thursday moved to reimpose 10% tariffs on some Canadian
aluminum products to protect U.S. industry from a "surge" in
imports, angering Ottawa and some U.S. business groups.

Canada pledged retaliation as tensions heightened between
the close allies just weeks after a new continental trade deal
between the United States, Mexico and Canada came into effect.

During a speech at a Whirlpool Corp washing machine
factory in Ohio to tout his "America First" trade agenda, Trump
said he signed a proclamation reimposing the "Section 232"
national security tariffs. The step was "absolutely necessary to
defend our aluminum industry," he said.

Ohio is a critical swing state that Trump won in 2016.
Polling shows a tight race with Democrat Joe Biden in the state
ahead of this year's Nov. 3 presidential election.

Trump trails the former vice president in national polls and
is competing with him for blue-collar working class voters. The
tariff announcement could be aimed at showing those voters he
intends to fight for their jobs and upend trade policy further
if he remains in office.

But some prominent business groups criticized the move as
counterproductive and unhelpful to U.S. interests.

The U.S. Trade Representative's office said the 10% tariffs
apply to raw, un-alloyed aluminum produced at smelters. The
tariffs do not apply to downstream aluminum products.

"Several months ago, my administration agreed to lift those
tariffs in return for a promise from the Canadian government
that its aluminum industry would not flood our country with
exports and kill all our aluminum jobs, which is exactly what
they've done," Trump said. "Canadian aluminum producers have
broken their commitment."

Canada has a natural advantage in primary aluminum
production because of its ample supply of hydroelectric power.

Canadian Deputy Prime Minister Chrystia Freeland said the
tariffs would hurt workers and regional economies already hit by
the coronavirus pandemic and pledged Ottawa would retaliate as
it had done in 2018, when Trump first imposed punitive measures
on Canadian steel and aluminum.

"In response to the American tariffs, Canada intends to
swiftly impose dollar-for-dollar countermeasures," Freeland said
in a statement.

Freeland - in overall charge of relations with the United
States - will formally respond to the tariffs at 11 am (1500
GMT) on Friday, her office said in a statement.

Rio Tinto , Canada's largest aluminum
producer, said the tariffs are "unfortunate" as they only
increase prices for U.S. consumers and undermine market
confidence in secure supplies of aluminium in North America.

"We are working with our U.S. customers to minimize any
negative impacts to the integrated supply of aluminium in North
America," a Rio Tinto spokesman said.

In 2018, Canada slapped tariffs on C$16.6 billion ($12.5
billion) worth of American goods ranging from bourbon to
ketchup. Trump lifted the sanctions in 2019.

Trump peppered his remarks with criticism of Biden and
predicted "depression time" if the Democrat won, higher taxes
and put more regulations.

"To be a strong nation, America must be a manufacturing
nation and not be led by a bunch of fools. That means protecting
our national industrial base," Trump said.

Trump has sparred with close U.S. allies over trade
throughout his presidency.

The U.S. Chamber of Commerce called the move "a step in the
wrong direction" that would raise costs on companies and
consumers.

The Aluminum Association, which says it represents companies
that produce 70% of the aluminum and aluminum products shipped
in North America, said the move undermined the new
U.S.-Mexico-Canada trade agreement at a time when domestic
demand was already down nearly 25% year-to-date.

Michael Bless, chief executive of Century Aluminum,
one of the few remaining U.S. primary aluminum smelting
companies and which lobbied for the tariffs, said the move
"helps to secure continued domestic production of this vital
strategic material".
(Reporting by Jeff Mason, Andrea Shalal and David Lawder in
Washington and Julie Gordon and David Ljunggren in Ottawa and
Ernie Scheyder in Houston; Writing by David Lawder and Jeff
Mason; Editing by Leslie Adler, Tom Brown and Daniel Wallis)

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