Trade Cases

Leibowitz on Trade: Canada and Mexico in the Crosshairs?

Written by Lewis Leibowitz

Trade attorney and Steel Market Update contributor Lewis Leibowitz offers the following update on events in Washington:

You may have seen news stories in the last two weeks about U.S. threats to impose tariffs on aluminum imports from Canada and Mexico because of “surging” levels of imports from those countries. 

Don’t believe everything you read: the import figures on aluminum from Canada and Mexico are underwhelming. While some aluminum products may have large increases from mid-2019 to mid-2020, the numbers for all aluminum are:

In 2019, imports of aluminum from Canada declined by 16 percent. Imports from Canada between January-May 2019 and the same period in 2020 increased by 18 percent, slightly more in percentage terms than the decrease from 2018 to 2019. In dollar terms, the difference is much smaller—$470 million more in imports from 2019 to 2020, while dollar value of imports decreased by $740 million from 2018 to 2019. It’s hard to put the word “surge” on that.

By the way, the numbers from Mexico are equally underwhelming. The increase in imports of aluminum from 2019 to 2020 rose from $442 million to $455 million, an increase of about 3 percent.  

The numbers I quote are not the only numbers one could consider. Advocates can tell quite a story with numbers. This increase from Canada is not alarming; however, some are arguing that it portends Armageddon. 

Steel is not immune from rumors of renewed tariffs on our USMCA partners Canada and Mexico. 

Tomorrow, President Trump and President Lopez Obrador of Mexico are scheduled to meet to celebrate the new USMCA taking effect. Imposition of tariffs on aluminum (and maybe steel also, which has been rumored) would certainly put a damper on the celebration. Indeed, these rumors were partially responsible for Canadian Prime Minister Justin Trudeau canceling his plans to attend the summit. 

Domestic industry interests are in full throated support of new tariffs, not only on aluminum but also products made from steel, like transformer components and mobile cranes. New Section 232 national security investigations deal with both of those issues. Regarding transformer components, Canada and Mexico are also leading exporters of products like transformer cores and laminations to the United States. Tariffs on those products are intended to benefit one U.S. producer of electrical steel, AK Steel. The damage to downstream industries would, according to comments recently filed, be considerable. 

President Trump thrives on keeping adversaries and allies guessing; he is doing that to Canada and Mexico. Clearly, his administration wants Canada and Mexico to take some action to restrict exports to the United States. Canada and Mexico appear unwilling to do so. 

In the meantime, court cases continue challenging the president’s authority to impose tariffs based on the records already developed. The end of the constitutional case does not end that other litigation. 

The administration is keeping their intentions close to the vest—perhaps when June import statistics come out early next month, the heat will turn up (or turn down) on Canada and Mexico regarding aluminum and steel. 

Speaking of numbers, I was recently asked at a virtual conference how much steel is actually subject to tariffs. I didn’t find an answer online so, as with the aluminum situation, I looked up the numbers. In 2019, about 31 percent of steel imports were subject to tariffs. In 2020, through April, the number appears to be about 17 percent. As one of my law professors used to say, “this program is more hole than donut.” 

That may not be a bad thing. 

The Law Office of Lewis E. Leibowitz
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Lewis Leibowitz, SMU Contributor

Lewis Leibowitz

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