**Kitimat**: Starting this week, unwrought aluminum from Rio Tinto’s Kitimat smelter faces U.S. tariffs of 25% to 50%. While aimed at supporting U.S. industries, experts warn of potential job losses and significant industry impacts across both nations.
Starting this week, all unwrought aluminum produced at Rio Tinto’s BC Works smelter in Kitimat, British Columbia, will be subject to tariffs ranging from 25 per cent to 50 per cent when exported to the United States. This smelter processes a significant portion of the region’s aluminum output, with approximately 80 per cent of its product traditionally destined for the U.S. market.
These tariffs are part of a broader strategy under the U.S. Trade Expansion Act, aimed at bolstering American steel and aluminum industries, which have seen a considerable decline since the late 20th century. Jerome Pécresse, the chief executive of aluminum for Rio Tinto, articulated the potential disruptions that these tariffs may bring, indicating that there will be “some short-term impact,” but added that the immediate concern will likely be felt by customers due to inflationary pressures. Speaking to Business in Vancouver, he stated, “You need to have cheap hydro power. Canada has cheap hydro power,” underscoring one of the competitive advantages Canada holds in aluminum production.
The new tariffs, effective from March 12, follow prior exemptions to duties imposed under the previous Trump administration, which had initiated tariffs on aluminum imports in 2018. In addition to the Trade Expansion Act regulations, broader tariffs prompted by the International Emergency Economic Powers Act (IEEPA) were established last week, targeting a wide range of Canadian imports.
According to a recent analysis from PwC, the combination of these tariff measures could lead to Canadian steel and aluminum imports facing an overall tariff rate of up to 50 per cent. The context for this aggressive trade policy mirrors a historical shift in U.S. industrial output. Once the world’s largest producer of primary aluminum in 2000, the U.S. now ranks ninth and represents just two per cent of global production, as noted by the Congressional Research Service.
In light of these developments, Pécresse affirmed that Rio Tinto has no immediate plans to reduce production or investment at its Kitimat operation, which currently employs over 1,000 workers directly and around 2,500 when including contractors. The company is historically noted for its significant capital investment, having modernised its Kitimat smelter nearly a decade ago with a $6 billion upgrade.
Although the tariffs are intended to support U.S. industry, voices from within the sector, such as Alcoa Corp.’s CEO Bill Oplinger, have expressed concerns that the resulting job losses could reach up to 100,000 across direct and indirect positions within the U.S. aluminum industry. “We view it’s bad for the U.S.,” Oplinger commented, suggesting that the tariffs may undermine the very jobs they are meant to protect or create.
As American aluminum prices begin to rise in anticipation of these tariffs, the industry is potentially bracing for significant changes. The incoming duties could compel Canadian producers, particularly those in British Columbia, to seek alternative markets in Europe and Asia. “At a certain point—particularly, I would say, for Kitimat—you could reorient sales from the U.S. into Europe or into Asia. We are prepared to do it, if we need to,” Pécresse explained, indicating a readiness to adapt to the evolving trade landscape.
As such, the impacts of these tariffs are likely to reverberate through the Canadian aluminum sector and beyond, as companies reassess their supply chains and customer bases in response to the shifting economic environment.
Source: Noah Wire Services
Subscribe to Industry Updates
