Industry Responds to Canadian Tariffs on Aluminum and Fenestration Products

Canada slapped retaliatory tariffs on U.S.-produced steel and aluminum and a host of other products on July 1, including a 10-percent surcharge on aluminum doors, door thresholds and windows. The tariffs will add 25 percent to the cost of imported steel products and 10 percent to the cost of imported aluminum products. The surtaxes are being placed on up to $16.6 billion in imports of steel, aluminum and other products from the U.S. That equals the value of 2017 Canadian exports affected by U.S. tariffs that were announced in late May.

Aluminum doors and windows represent a healthy portion of the huge cross-border fenestration trade between Canada and the U.S. These recent tariffs could have a significant impact on the North American fenestration industry.

“Tariffs on aluminum and steel imports or exports have potentially far-reaching consequences that could impact all fenestration industry companies to varying degrees since these materials are used in numerous components as well as manufacturing machinery,” says Janice Yglesias, executive vice president of AAMA. “The issues attempting to be addressed by these tariffs are complex and would likely be better served by a multi-faceted comprehensive strategy. We are hopeful that government officials from both sides of the border will collaborate to implement an effective solution.”

Jeff Henderson, president of the Aluminum Extruders Council (AEC), spoke against these most recent tariffs.

“It is sad to see the long established supply chains across the U.S./Canadian border being infected with unnecessary and counterproductive tariffs on aluminum. It becomes maddening when we are told this has been done in the name of National Security,” said Henderson. “The AEC continues to maintain the real relief needed in the aluminum industry is from the unrelenting and unchecked overproduction of aluminum products from China.”

Aluminum industry suppliers have also spoken up about the tariffs and their potential impact. Mike Petersen, CEO of PAC-CLAD/Petersen, said “the initial announcement of tariffs resulted in immediate shortages as all available material was quickly swept off the street.” He added that aluminum markets will continue to be volatile for the foresee-able future, and advised keeping inventories low.

According to Mike Turner, senior vice president of marketing and sales with YKK AP, it’s too early to determine the full scope of impact the tariffs will have on aluminum and curtainwall. “However, any time there is an increase in the cost to build it raises anxiety in the market. We also believe the tariffs will have an impact on numerous other industries, which becomes a concern for the greater overall economy,” says Turner. “As a whole, the industry always strives to find ways to avoid passing on cost escalations, yet the magnitude of the recent rise in costs created by tariffs has required many manufacturers to reconsider pricing. Many manufacturers, YKK AP included, are seeking ways to mitigate price escalation to our customers.”

Hydro, an aluminum extruder with U.S. operations, issued a statement on the tariffs, noting that they will have a direct impact on its business in North America due to its precision tubing, extrusion and casting operations in both Canada and Mexico. The company is also working to minimize the impact on raw material supply, “and optimize the placement and flow of business in order to help address the impact to our customers.”

The statement reads, “As a global company, Hydro strongly supports a free, fair and rules-based approach to international trade. We support practices that contribute to the long-term sustainability of industry and a healthy economy … The import of extrusions and material from the E.U. will also be impacted. Due to the complexity of this situation, it will take some time before the full impact of these tariffs on the domestic and global markets is clear.”

Other companies, however, aren’t as concerned about the potential impact of the tariffs. According to Jim Mitchell, CEO of Integro, a contract glazing firm with operations in the U.S. and Canada, “Specific industry-wide issues are arising in the current high-growth, high-demand marketplace—focusing on demand producing upward price pressures, and cost pressures being exacerbated by new tariffs on aluminum.” He says the company’s two-country, multi-location production approach helps mitigate or avoid increased cost surprises for clients.

“We order material for our U.S. jobs from U.S extruders and materials for our Canadian jobs from Canadian extruders, so tariffs likely do not come into play. Additionally, by design , we are one of few companies able to manufacture closer to the client at any one of our geographically-diverse production facilities …”

According to statistics from Canada’s Ministry of Innovation, Science and Economic Development, Canada imported about $108 million in aluminum doors and windows from the U.S. in 2017. That’s about 86 percent of all U.S. global aluminum door and window exports, according to statistics from the U.S. Department of Commerce’s International Trade Administration (ITA). About 17.7 percent of all U.S. global door and window exports were aluminum products, according to the ITA.

Canada exported about $324 million in aluminum doors and windows to the U.S. in 2017, according to statistics from Canada’s Ministry of Innovation, Science and Economic Development.

From 2011 to 2016, exports of U.S. aluminum fenestration products grew faster than any other segment with a 3.9 percent compound annual growth rate (CAGR) during that period, according to the ITA.

According to the ITA, about three-quarters of all Canadian door and window imports come from the United States. About 54 percent of all U.S. door and window exports went to Canada in 2016. That represented about $415 million of total global U.S. fenestration exports of $768 million.

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