Tax Insights: United States reimposes Section 232 tariffs on Canadian aluminum exports; Canada proposes countermeasures

Issue 2020-31

In brief

The United States, citing a surge above historical import levels of non-alloyed unwrought aluminum articles from Canada, has re-imposed Section 232 tariffs under the joint Canada-US agreement signed May 17, 2019. Effective August 16, 2020, a 10% ad valorem additional duty will be levied on these aluminum imports from Canada into the United States. Canada has proposed reciprocal countermeasures of 10% on certain US imports.

In detail

On May 17, 2019, Canada and the United States signed an agreement to end the US Section 232 tariffs on Canadian steel and aluminum imports and the Canadian tariffs imposed against goods of US origin. The agreement provides for continued monitoring and a mechanism to prevent another surge of steel and aluminum imports from Canada by allowing for the re-imposition of the Section 232 tariffs when imports exceed historical levels.

In a Statement on Presidential Proclamation issued August 6, 2020,¹ the Office of the United States Trade Representative announced that Canadian exports of non-alloyed unwrought aluminum articles to the United States have surged above historical levels, leading the United States to reimpose the tariffs, as provided for in their May 2019 agreement with Canada.

Under the same May 2019 agreement, and in swift response to the United States’ actions, the Canadian Department of Finance also announced its intention to reimpose tariffs/surtaxes on aluminum and aluminum-containing products imported from the United States, proportionate to the amount of Canadian aluminum products impacted by the US tariffs. The Canadian government has provided a list² of US-origin goods which will be subject to an additional 10% surtax when imported into Canada, effective September 16, 2020. You can find the list here. Whether or not goods are of US origin will be determined in accordance with the Determination of Country of Origin for the Purposes of Marking Goods (CUSMA Countries) Regulations.³

The 10% surtax on US-origin goods will continue until the United States eliminates its Section 232 tariffs on Canadian imports. Canadian importers should note that the countermeasures will not apply to US goods in transit to Canada on the day on which these countermeasures come into force.

The Canadian government is seeking input from interested parties that may be impacted by the new surtax. Written comments from interested parties should be submitted by email⁴ by September 6, 2020 and include the following details:

1. Canadian company/industry association name and contact person
2. Relevant eight-digit tariff item(s) and description of the goods of particular interest
3. Reasons for the expressed support for, or concern with, the proposed countermeasures, including detailed information substantiating any expected beneficial or adverse impact
4. Identification of any information provided in the submissions that is commercially sensitive

^{1. ustr.gov/about-us/policy-offices/press-office/press-releases/2020/august/statement-presidential-proclamation}

^{2. canada.ca/en/department-finance/programs/consultations/2020/notice-intent-impose-countermeasures-action-against-united-states-response-tariffs-canadian-aluminum-products.html}

^{3. laws-lois.justice.gc.ca/eng/regulations/SOR-94-23/}

^{4. Email address: fin.tariff-tarif.fin@canada.ca.}