Canada may offer financial aid to aluminium producers if 50% US tariffs remain

Canada is preparing for potential financial intervention in its aluminium industry, as the fallout from President Donald Trump’s steep US tariffs risks deepening into a full-blown trade standoff. As per Reuters, early-stage discussions are underway within Ottawa to support large aluminium producers, including Rio Tinto, should Washington’s 50 per cent tariff on aluminium imports remain in place beyond the near term.

Jean Simard, CEO of the Aluminium Association of Canada, confirmed the deliberations in an interview on Saturday, stating that “everything is on the table” if no deal is reached with the US by July 21. “With the 50% tariff in effect since June 4, it’s normal that there are discussions about the impact on business liquidity if the situation persists,” Simard told Reuters.

Tariffs double under Trump as trade tensions rise

The US president’s decision last month to double steel and aluminium tariffs from 25 to 50 per cent marks a dramatic escalation in his broader trade agenda. Washington claims the measures are aimed at boosting domestic production of strategic industrial materials — but they’ve triggered strong backlash from allies like Canada.

Over half of all aluminium consumed in the United States is imported, and Canada is its largest supplier, exporting over 3.2 million tonnes of the metal to its southern neighbour in 2024, according to industry data. Major Canadian aluminium firms, including Rio Tinto, do not currently face liquidity concerns. However, sustained tariffs at 50 per cent would severely squeeze their cash flows and long-term competitiveness, said Simard.

Ottawa in talks with Rio Tinto

According to Reuters, Canadian federal industry minister Mélanie Joly has privately confirmed discussions with Rio Tinto regarding financial assistance. The company has so far declined to comment on the negotiations. Joly’s office issued a statement Saturday saying the government is in “active conversations” on how best to support the aluminium sector in light of “unjustified American tariffs”, with the broader goal of safeguarding jobs and encouraging future investment, as quoted by Reuters.

Canada recently dropped plans to impose a digital services tax on American tech firms, a goodwill move to keep trade negotiations with Washington alive. However, aluminium has emerged as a major sticking point.

No deal yet, but time is running out

The Canadian government hopes to reach a tariff resolution with the US before the July 21 deadline, but officials acknowledge that uncertainty remains high. If no breakthrough is achieved, Canadian officials warn that retaliatory or compensatory measures may need to be considered. Simard noted that financial support would only be one part of a broader industrial response to offset the tariffs’ effects.

The rising friction comes amid a broader reshuffling of global trade dynamics, with Washington now simultaneously clashing with both China and its traditional allies over market access and industrial policy. For now, Canada’s aluminium giants and the tens of thousands of workers in the sector, await clarity as talks continue behind closed doors.

(With inputs from the agencies)