U.S.-Canada Tariff Deal Must Address Transshipment, Quebec Says

(Bloomberg) -- The Premier of Quebec knows a thing or two about the aluminum industry and says he has a good idea of what’s needed to help alleviate tariffs the U.S. has imposed on Canada.

Philippe Couillard said transshipment -- when exporters send goods to an intermediate destination to avoid taxes in the final destination -- is the main concern for the U.S. after he met Tuesday with Commerce Secretary Wilbur Ross in Washington.

Given his province produces 90 percent of the aluminum made in Canada and that about half of the metal consumed in the U.S. comes from Canada, the Premier said it is “critically important” to put even more effort into this.

“If that is the problem, it can be solved at the negotiating table,” he said on Bloomberg TV.

He supports proposed measures to prevent a potential flood of steel imports from global producers seeking to avoid U.S. tariffs. Those measures are said to be a combination of quotas and tariffs aimed at certain countries including China.

Speaking from Bloomberg headquarters in New York, Couillard said he has no evidence that transshipment is occurring through Canada, but it is possible in theory, and he understands why it’s a concern for the U.S.

‘Negotiable Issue’

Addressing transshipment would probably suffice, although there are a couple of other steps that could be taken, he said, without elaborating.

In March, President Donald Trump announced a 25 percent tariff on steel imports and a 10 percent tariff on aluminum. Canada and some other major trading partners were given temporary exemptions but failed to reach agreements.

“There’s no need to plunge our countries into conflict on something that is essentially a manageable and negotiable issue,” Couillard said. “The first thing we mentioned to our American colleagues is we started acting on this transshipment issue before the tariffs.”

While Couillard is committed to addressing the issue, upcoming elections in Mexico and Canada make it more difficult for politicians to negotiate on these matters. In the end, though, it’s American consumers who may be hurt the most.

“If it cost more to put aluminum in cars, and most aluminum in American-made cars comes from Quebec, then who is going to pay the bill?” Couillard said. “The person buying the car.”

©2018 Bloomberg L.P.