Quebec prepared to offer financial support for aluminum producers

MONTREAL _ The Quebec government is prepared to support financially smaller aluminum producers hurt by U.S. tariffs just as it did with the softwood lumber sector, the province’s economic development minister said Monday.

“If there is a risk of reducing their production or a risk of not being able to export as much, we will be there to support them in making sure that they maintain the jobs that they have in that sector,” Dominique Anglade told an aluminum summit.

“This is the approach we took with softwood lumber, we’ll be taking the same approach yet again this time with Quebec firms in aluminum.”

The minister didn’t announce details of that support, but said a meeting will take place next Monday with the various players.

Quebec has offered up to about $300 million in loans and loan guarantees to softwood lumber producers. It has received about 20 requests for financial support, but no money has yet been distributed, a government official said.

The aluminum industry has been in discussions with the Quebec and federal governments for several weeks about helping small companies that lack the cash flow or profit margins to pay 10 per cent tariffs, said Jean Simard, president of the Aluminum Association of Canada.

U.S. President Donald Trump had exempted Canada, Mexico and the European Union when he imposed 25 per cent import duties on steel and 10 per cent on aluminum in early March. Those exemptions ended Friday, prompting retaliation from the Canadian government.

“This is uncharted territory,” Simard told reporters at the summit, which he described as a first for the industry.

“We will need days and weeks to find out how we have to tailor the programs to make sure that at the end of the day we don’t lose any members of the industry.”

The tariffs aren’t expected to have an immediate impact on jobs, but the goal is to avoid losing companies that transform aluminum to other products that are economically important for the industry.

International Trade Minister Francois-Philippe Champagne told the summit that the U.S. tariffs are deeply disappointing and will do nothing to address the real problem of overcapacity coming from China.

The aluminum industry and politicians from Canada and Quebec are meeting for two days to discuss challenges facing the sector including U.S. tariffs against Canada and other global suppliers.

The event started Sunday with a discussion about free and fair trade by former Quebec premier Jean Charest and the heads of several aluminum producers. The sessions Monday will focus on government policy dealing with global overcapacity along with the support of free and fair trade.

“Clearly what happened last week was a direct attack on our economy in a way that is totally unreasonable especially in that it’s not addressing the main issue,” Anglade said.

“We all know that we have an issue of overcapacity with China.”

She said the province and Canada have no choice but to fight the U.S. administration’s decision.

Canada has laid out retaliatory tariffs set to be applied July 1. They will match the steel and aluminum tariffs and add duties to a wide range of consumer goods.

Aluminum supports about 30,000 jobs in Quebec, which is a major supplier of the metal. Of the $8 billion worth of aluminum exported from the province, $7 billion goes to the United States.

Trump has created chaos with his aggressive approach to trade but may have created an opportunity to build a multilateral trading system that deals with the reality of China’s state-owned enterprises, said Chad Bown, senior fellow of the Peterson Institute for International Economics.

“I think he has caught the attention of a lot of people around the world, including China, and China may be willing to engage on issues that they hadn’t previously been willing to come to the bargaining table before,” he said.

Tariffs on Chinese steel and aluminum, for example, have not resolved the problem of global overcapacity, so a potential path forward can come from putting the onus on China and the World Trade Organization to negotiate, he said.

But that means not dictating rules to China or forcing them to adopt western-style market structures, but seek a way to accommodate their system, Bown said.