Business

Grassley, Canadian officials see 'win-win' as U.S. avoids aluminum tariffs

Livestock trailers, appliances among $88 million of Iowa exports subject to counter-tariffs

#x201c;If I have to sweat a little bit to help out the farming industry, I'm OK with that,#x201d; says Rick Heller, pres
“If I have to sweat a little bit to help out the farming industry, I’m OK with that,” says Rick Heller, president of the Metal Supermakets’s Cedar Rapids location. (Jim Slosiarek/The Gazette)
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On a trip to Canada earlier this year, Rick Heller got a firsthand look at both sides of the debate on aluminum tariffs.

Heller, who works in the aluminum industry, was hopeful they would help farmers and potential customers down the street.

He heard from quite a few people in Canada, including his Uber driver, who thought otherwise, though.

“I got to talk to quite a few people,” said Heller, the owner of the Cedar Rapids franchise of Metal Supermarkets.

That debate is on hold for now, though, after U.S. Trade Representative Robert Lighthizer backed off on plans to impose 10 percent tariffs on Canadian aluminum.

The countermeasure Canada was about to implement would have put a 10 percent tariff on $88 million of annual aluminum exports from Iowa to Canada.

That includes $43 million every year in livestock trailers, with products ranging from aluminum baseball bats to washing machines also affected.

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Iowa’s U.S. Sen. Chuck Grassley said he was “very happy” to see the tariffs go away.

“I was kind of exasperated when they were put in the first place,” Grassley said during a phone interview on Wednesday.

Ariel Delouya, Consul General of Canada in Minneapolis, similarly “was very pleasantly surprised” by Tuesday’s announcement.

A news conference Tuesday intended to announce 10 percent counter-tariffs on the United States instead became one to applaud Lighthizer’s decision.

Delouya, whose consulate covers a five-state area in the Midwest that includes Iowa, said the timing of the announcement right before Canadian countermeasures is “probably not coincidental” but still a “win-win.”

“We were delighted with that,” said Delouya by phone Wednesday.

“We never understood the justification or basis for the tariffs.”

As a Section 232 tariff, the official reason under U.S. trade law is a “threat to U.S. national security.”

Yet Delouya pointed to continued national security cooperation between the two countries, whether it be in production of defense technology or in the protection of U.S. airspace in the hours after the Sept. 11 attacks 19 years ago.

When U.S. aluminum manufacturers slowed production because of the coronavirus pandemic, that resulted in a surge in imported non-alloyed, unwrought aluminum from Canada.

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But Canadian officials said that surge was not likely to last long, with projections of unalloyed aluminum production being equal or lower than the last full year without tariffs.

“We are actually seeing the reverse in terms of a shift away from those sorts of exports of Canadian aluminum to the United States,” Delouya said. “Because the market has picked up in the United States.”

Heller, of Metal Supermarkets, said the counter-tariffs would have “a little impact” on his business, so the tariffs are hardly a back-breaker.

“If I have to sweat a little bit to help out the farming industry, I’m OK with that,” Heller said. “If these farmers have more cash in their pocket to spend, well they’re going to be buying materials to repair their equipment, and hopefully they buy from me.”

Metal Supermarkets sells small-quantity aluminum, steel and other metals made by other companies to businesses and consumers.

But much of Grassley’s concerns with the Section 232 tariffs are because of agriculture, not despite it.

Grassley pointed to the risk of Canada adding tariffs to Iowa’s ag products as a reason to avoid tariffing Canadian aluminum.

“They know where to go because agricultural exports are sensitive,” Grassley said. “Almost any country would attack our agricultural exports if they want to retaliate against the United States.”

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The “big breakthroughs” from the United States-Mexico-Canada Agreement for exporting poultry, wheat and other agricultural products, Grassley said, could go out the window with the aluminum tariffs.

“It would just nullify all the big gains we had under USMCA,” Grassley said.

‘A surge’

Aluminum tariffs between Canada and the United States are not new to 2020. The Trump administration added Canada and Mexico to the list of countries facing Section 232 aluminum and steel tariffs in 2018.

Back then, Grassley was also vocally against them.

“We couldn’t even get the (USMCA trade deal) up in the United States Congress with those tariffs on,” Grassley said.

“It took us four or five months to get the president to take those tariffs off. And once he got them off, we were able to move forward and get USMCA through the Congress.”

When the tariffs on Canadian aluminum resumed, Grassley got a call from Chrystia Freeland, deputy prime minister and finance minister of Canada, asking for help.

“She said, ‘I tried to convince your Trump administration that this was a surge that wasn’t going to last very long,” Grassley recalled.

“I just made it known that I thought it was bad,” Grassley said. “I don’t know exactly what the process was in this administration to take them off, but it was surely good” that the tariffs were dropped.

Lighthizer still is evaluating the tariffs on a month-to-month basis, though. If Canadian exports exceed 105 percent of the expected volume, they may return.

The lack of tariffs for now is welcomed news for Delouya, though.

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“At the end of the day, we’re delighted that we’re not forced to go forward with those countermeasures,” Delouya said.

“We don’t want to be imposing countermeasures on our closest economic partner in trading.”

While the tariffs Heller was hoping for aren’t there, he is happy with trade conditions following the USMCA.

“Now we’re able to sell milk, cheese and whatnot to the Canadians,” Heller said. “I see some good in it.”

Comments: (319) 398-8394; john.steppe@thegazette.com

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