President Trump's effort to squeeze Canada is coming back to bite American businesses as a new report reveals just how hard it is for the US to find an alternative to something it has long purchased from its northern neighbor.
"This country desperately needs aluminum," Trump admitted during an August telephone rally for Oklahoma Republican gubernatorial candidate Mike Mazzei. He later added: "We don't have it. We get it all from Canada, for the most part, and we need it badly."
That admission now looks very odd as Trump has imposed a 50 percent tariff on Canadian aluminum imports, yet American companies still need the metal to make cars, build houses, manufacture aircraft, construct data centers and all sorts of other things.
The Wall Street Journal reported Tuesday that the tariffs have driven the premium paid for aluminum in the US to record levels, adding costs for businesses that have very few real alternatives.
Higher material costs could eventually make their way to car buyers and families trying to build homes.
The issue is decades old, as there were 24 operating aluminum smelters in America 26 years ago. Today, there are just four, with Canada providing about 70 percent of US aluminum imports.
It's not simply that Canadian companies can produce the metal cheaper. Aluminum production requires enormous amounts of electricity, so the advantage of having access to cheap power is crucial. Quebec's huge hydropower resources give its smelters an advantage that their American counterparts simply can't match.
There's an irony in the very fact that America helped Canada build its aluminum factories. During World War II, the US helped turn the remote Saguenay region of Quebec into an aluminum powerhouse to supply aircraft and munitions. Thousands of Canadians built smelters and a hydropower plant in freezing conditions in just 18 months, and the region has supplied American manufacturers ever since.
Rio Tinto is investing $1.5 billion in modernizing its operations in the region, while a proposed $4 billion smelter in Oklahoma is meeting resistance over pollution, foreign ownership, and the public money required to get it built.
That leaves US manufacturers paying more today, while Trump's domestic replacement remains very much in doubt.
Canada, in the meantime, has found other partners, with its aluminum shipments to Europe up 77 percent year on year through August, according to the Journal, indicating that producers are finding other markets as Washington makes their principal market increasingly difficult to access.
For American businesses, that creates another problem. Even if Trump eventually wants more Canadian aluminum, suppliers may have other places to sell it.
