U.S. to remove tariffs on Canadian aluminum, Ottawa drops threat of retaliation

© Reuters. FILE PHOTO: Canada's Minister of Small Business, Export Promotion and International Trade Mary Ng speaks during Question Period in the House of Commons on Parliament Hill in Ottawa

By David Lawder and David Ljunggren

WASHINGTON/OTTAWA (Reuters) - The Trump administration said on Tuesday it will remove 10% U.S. tariffs on raw Canadian aluminum as long as imports of the metal stay below levels that are expected to "normalize" over the next four months.

In response, Canada dropped a threat to impose billions of dollars of retaliatory sanctions, marking the end of a spat between the major trading partners.

The U.S. Trade Representative's office said the decision came after consultations with Ottawa determined that aluminum imports during the September-December period of 2020 were expected to fall 50% from the January-July period.

U.S. President Donald Trump had reimposed a 10% tariff on non-alloyed, unwrought aluminum from Canada in August after a surge in imports across the northern U.S. border.

Canadian Trade Minister Mary Ng said the U.S. announcement marked an end to an "incredibly difficult" few months for domestic producers.

"Canada has not conceded anything. We fully retain our right to impose our countermeasures if the U.S. administration decides to reimpose its tariffs on Canadian aluminum products, and we are prepared to do so," she told a news conference in Ottawa

USTR said that it now expected raw aluminum imports from Canada to be 70,000 to 83,000 tons per month through December. If it is determined that in any month imports exceed 105% of those levels, USTR said it will retroactively impose the 10%tariffs on all shipments for that month.

Canada has always rejected the idea of quotas on aluminum exports. When questioned about the U.S. levels, Deputy Prime Minister Chrystia Freeland said: "This is not a negotiated deal ... we have not negotiated an agreement with the United States on quotas".

Rio Tinto Aluminum (L:RIO) Chief Executive Alf Barrios said the U.S. move was "a positive step that ensures the North American aluminum supply chain remains strong in the face of challenging global conditions."