The impact of tariffs on Canada's aluminum sector is starting to be felt, with data showing a precipitous decline in the dollar value of exports to the United States, according to statistics compiled by an international trade expert.
The vast majority of Canada's aluminum exports go to the United States. While producers have been able to pivot some output toward the European Union, the total value of all international aluminum exports from Canada still hit a 36-month low in June.
Prof. Werner Antweiler, an international trade expert at the University of British Columbia's Sauder School of Business, is studying the trend using data from Statistics Canada. He found that the value of exports to the U.S. in June was down by about one-third from the 36-month average, and down by half from a high point in March.
U.S. President Donald Trump implemented 25-per-cent tariffs on steel and aluminum in mid-March, increasing rates to 50 per cent on June 4.
The value of aluminum exports declined each month from April onward. Aluminum exports to the U.S. in June were worth approximately $400 million less than the three-year average, and $800 million less than in March.
Canada is the world's fourth-largest aluminum producer, and has nine aluminum smelters: eight in Quebec and one in Kitimat, B.C. On average, Canada produces 3.3 million metric tons per year, with 432,000 coming from Kitimat, according to the Aluminium Association of Canada.
Canada exports $10.8 billion worth of aluminum each year, 93 per cent of which goes to the United States.
Antweiler reckons the exports to the U.S. have not yet reached bottom.
"I don't think we have seen the full picture yet," he said. "I do expect that shipments to the United States will decrease further."
Some of this decline in the value of exports is from Canadian producers reducing prices to remain competitive. Canadian producers appear to have been absorbing some of the tariffs, passing on only a portion to U.S. customers.
At the higher tariff level introduced in June, a lot more of the extra costs will likely be passed on to consumers, and at some point, Canadian aluminum will no longer be as viable on the U.S. market.
"Canadian producers can only sacrifice their margin, but they won’t sell at a loss," Antweiler said.
Another issue for producers is that because the United States has aluminum tariffs on more countries than just Canada, others will likely be trying to divert shipments as well, flooding the market and depressing prices in those new destinations.
One big question that remains is how much the U.S. can ramp up production from domestic aluminum producers. Antweiler expects that the U.S. cannot replace all its imports domestically. At some point, downstream users of aluminum products in the U.S. will need to absorb the higher prices and keep buying from Canada.
Impact in British Columbia
According to B.C.'s Jobs and Economic Growth Ministry, aluminum is one of B.C.'s top exports, despite it all being from a single source in Kitimat. In 2024, the province exported $1.7 billion worth of aluminum, representing 3.1 per cent of total exported goods.
Like Canada as a whole, the U.S. is the primary destination. In 2024, 82 per cent of B.C.'s aluminum exports, worth $1.4 billion, went to the U.S. The Netherlands was another major destination, receiving 11 per cent of Kitimat's aluminum in 2024.
So far, the tariff impacts have not been as severe for B.C. as they have for Canada as a whole, but the dollar value of the province's aluminum exports did reach a two-year low in June.
The BC Works smelter in Kitimat, owned by international mining firm Rio Tinto, employs about 1,500 people directly and indirectly. The operation has its own hydro-power station providing clean energy and local jobs.
Rio Tinto did not respond to a request for comment, but Kitimat Mayor Phil Germuth says he has not yet heard of any local job impacts.
"There's no production cutbacks, there's no job losses predicted that we know of," he told Black Press Media. Germuth said he is more worried about low water levels in the reservoir where the smelter's powerhouse is located.
He hopes that countries other than the U.S. will be keen on buying Kitimat aluminum because it is produced with clean electricity.
"If those countries out there are looking for environmentally sustainable aluminum, that clearly gives us an advantage," he said.
