Quebec’s Legault Says Canada Should Consider Aluminum Tax To Create Leverage Against U.S.

Quebec Premier Francois Legault said Canada should consider putting export taxes on products such as aluminum to create leverage in negotiations with President Donald Trump’s administration.

The leader of Canada’s second most-populous province said the country should retaliate against the U.S. only if Trump actually implements tariffs against its northern trading partner. The president has threatened to do so on March 12, according to a proclamation issued by the White House.

If Trump follows through, “I think we should consider also putting exportation tariffs on products like aluminum where they really need us,” Legault told reporters in Washington. That would drive up costs even more for US manufacturers and builders that use the metal.

Trump signed an executive order this week to put 25% tariffs on all steel and aluminum imports, regardless of where they come from. Canada was the source of nearly 60% of U.S. aluminum imports over the past year, according to data from the U.S. Department of Commerce, and most of that is produced in Quebec.

Trump’s policy aims to bolster U.S. production and create more manufacturing jobs. “It’s going to mean a lot of businesses are going to be opening in the United States,” Trump said Monday as he signed the measures. The new rates were authorized under Section 232 of the Trade Expansion Act, which gives the president broad authority to impose trade restrictions on domestic security grounds.

But U.S. manufacturers’ competitiveness “will suffer” because of higher input costs, John G. Murphy, an executive at the U.S. Chamber of Commerce, wrote in a social media post. There are about 10.7 million workers employed by businesses or entities that use aluminum that stand to be hurt, he said.

“The legal claim behind these Sec. 232 tariffs that aluminum imports from Canada ‘threaten to impair the national security’ of the U.S. is wrong,” Murphy wrote.

The experience of Trump’s first attempt to use steel and aluminum tariffs in 2018 and 2019 suggests that much of the cost would be borne by U.S. companies that need those products, Nathan Janzen, assistant chief economist of Royal Bank of Canada, said in a report. Those levies were 10% on aluminum and 25% on steel.

Janzen explained that it’s difficult for U.S. producers to find alternative suppliers or substitutes, especially for highly specialized products. This is particularly true for aluminum. “Canada’s total 2024 trade balance in steel and aluminum products (those targeted with tariffs) was $14 billion (US$9.8 billion), with $11 billion from the aluminum trade,” he said.

Canadian producers are heavily reliant on the U.S. market, accounting for 93% of their primary aluminum exports, according to Aluminum Association of Canada.

Pittsburgh-based Alcoa Corp. and London-based Rio Tinto Plc manufacture most of that in Quebec, where hydropower reduces the cost of the electricity needed for production. Almost 4% of Quebec’s manufacturing payroll relies on this industry, the AAC said.

“Remembering how disruptive a 10% tariff was for the U.S. industry, I can only begin to imagine how destructive a 25% tariff will be for the U.S. economy,” AAC Chief Executive Officer Jean Simard said in an emailed statement. “We’ve seen this play out before five years ago, and we are ready to take on this challenge once again.”

Quebec’s production could potentially be shipped to Europe instead if higher prices affect U.S. demand, he said.