The United States relies heavily on aluminum imports from Canada in order to support the auto industry. Canadian aluminum is cheaper because it requires a lot of energy to produce, and Canada has raw smelters which are powered by hydro-power, something the United States doesn’t have right now.
Steel VS Aluminum
Although still makers in the United States, including two of the biggest U.S. manufacturers AK Steel and U.S. Steel, were very supportive of the new tariff bill, which U.S.Steel even deciding to reopen a steel mill in Illinois which has been closed for two years. The aluminum industry, and industries that depend on it, where much more alarmed.
Although there was a lot of relief felt when Canada and Mexico where temporarily giving exemption from the new tariffs, which would charge 25 Percent for steel imports and 10 percent for aluminum, it is still a very large concern for many.
Supply and Demand
The president of Novelis North America, a large aluminum supply, said that we should be focusing on Chinese steel and aluminum, not the Canada. “We firmly believe that Canada … can be a significant ally along with others to correct the Chinese overcapacity issue. To preserve the health of the U.S. aluminum industry, the administration must exempt Canada from tariffs.”
Suppliers have had to step up demand for aluminum even before the new tariffs were announced, thanks to a rising demand from the United States’ auto industry. The senior director of public affairs of the Aluminum Association, Matt Menan said that the united states just can’t produce enough of it, whereas Canada can. “Smelters are hugely expensive, and it takes a long time to build them,” Meenan said. “Even if we have all of our U.S. capacity running, it wouldn’t be nearly enough to supply the demand.”