Tensions around aluminum appear to be rearing their head again even as the new NAFTA is only weeks away from taking effect
Just weeks before Canada’s long-negotiated trade agreement with the U.S. and Mexico is set to take effect, there’s mounting speculation that Washington is preparing to re-introduce tariffs on Canadian aluminum in what’s likely to cause a political uproar with serious economic fallout for the domestic industry.
The U.S. is the primary export destination for Canada’s $13-billion aluminum industry, accounting for 83 per cent of its trade in 2018.
Nonetheless, in recent weeks, aluminum future prices on the Chicago Mercantile Market have risen, which some analysts attribute to behind-the-scenes lobbying efforts by two U.S. aluminum producers, pressure from other aluminum producing countries, and the likelihood that U.S. President Donald Trump will impose new restrictions on Canadian aluminum.
“If you’re the Canadians you’ve got a lot of people lined up betting against you,” said Gregory Wittbecker, a U.S.-based senior analyst of the aluminum sector at the market research firm CRU Group. “The market is betting there’s going to be some type of restriction imposed on the Canadians.”
Aluminum August futures at the Chicago Mercantile Exchange were trading at about US$1,592.75 per metric tonne, compared to US$1,546 on Tuesday in the spot market. That could indicate the market is factoring in quotas on Canadian aluminum.
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