LONDON (Reuters) – It is almost a year since the United States imposed duties on imports of aluminum and steel on national security grounds. If the aim of the so-called “Section 232” tariffs was to lift domestic production, President Donald Trump’s administration can claim a degree of success.
U.S. output of primary aluminum has started rising sharply thanks to restarts of idled capacity, although not all of them have been directly down to the 10-percent import tariff.
If, however, the aim was also to tackle rising import penetration, particularly by Chinese aluminum producers, tariffs may already have passed peak effectiveness. Ever more gaps are appearing in the aluminum trade wall as the number of exclusions granted for specific products lengthens.
China has been a major beneficiary of the exclusions process with approved import tonnages not far off actual volumes in 2017. It has fared considerably better than Canada, long-standing U.S. ally and a strategic supplier of aluminum to its neighbor.
Hardly any Canadian metal has been excluded from the tariffs, which is why the country’s Foreign Minister Chrystia Freeland is lobbying hard for a full exemption. So runs the law of unintended consequences but it also highlights the limited effectiveness of tariffs if, like the United States, you are heavily import dependent.