Canada could financially back aluminum producers if 50% U.S. tariffs persist, trade group says

Canada has discussed offering financial support to large aluminum producers like Rio Tinto impacted by a U.S.-led trade war, in the event that Washington's 50% tariff on imports of the metal persist in the medium term, the CEO of a key industry trade group said on Saturday.

Aluminium Association of Canada CEO Jean Simard told Reuters in an interview that the early talks could help the sector in the event that Ottawa is unable to reach a planned deal with its key trading partner by July 21. 

"It's part of a larger discussion where everything is on the table," Simard said, adding that no decision has been reached.  

Canada recently canceled a digital service tax on U.S. technology companies in order to preserve trade talks with U.S. President Donald Trump, but another irritant remains in the ongoing negotiations.

While the major aluminum producers operating in Canada do not have liquidity problems, Simard said, a 50% U.S. tariff on aluminum imports would inevitably have an impact on finances if it continues longer term. 

He added that with the 50% tariff in effect since June 4, it's normal that there are discussions about the impact on businesses' cash flow if the situation continues.

Around half of all aluminum used in the U.S. is imported, with the vast majority coming from Canada.

Simard's comments follow media reports late Friday in which federal industry minister Mélanie Joly said the government is having conversations with Rio Tinto about providing financial assistance due to the crushing U.S. tariffs. 

Rio Tinto declined comment on Saturday. A spokesperson for Joly's office said in a statement that Ottawa is in "active conversations" on how it can best support Canada's aluminum industry in the context of unjustified American tariffs, with the goal to support increased investment in the sector.

U.S. President Donald Trump doubled tariffs on steel and aluminum imports to 50% last month, stepping up pressure on global steel producers and deepening his trade war, to support domestic production of the vital materials for construction.