Canada Considers Aid for Aluminum Producers Amid U.S. Tariff Tensions

Canada is exploring financial assistance for major aluminum producers like Rio Tinto (NYSE:RIO) as the U.S. maintains steep tariffs on aluminum imports, according to Jean Simard, CEO of the Aluminium Association of Canada. Speaking to Reuters, Simard said Ottawa is in early-stage discussions on potential support measures if a resolution with Washington isn't reached by July 21.

The U.S., under President Donald Trump, imposed a 50% tariff on steel and aluminum imports starting June 4, citing the need to boost domestic production. This move has significantly impacted Canadian aluminum producers, who supply the majority of the aluminum used in the U.S.

While Simard emphasized that Canadian aluminum companies are not facing immediate liquidity issues, he warned that prolonged tariffs could strain their financial health. He noted it’s natural for discussions to be underway, as extended tariffs could disrupt cash flows for key players in the sector.

On Friday, Canadian Industry Minister Mélanie Joly confirmed that the government is in active talks with Rio Tinto regarding potential financial assistance to mitigate the effects of what she described as “unjustified” U.S. tariffs. A spokesperson from Joly’s office reiterated Ottawa’s commitment to supporting increased investment in Canada’s aluminum industry.

Earlier, Canada scrapped a proposed digital services tax on U.S. tech firms to keep trade negotiations on track. However, aluminum remains a sticking point in ongoing talks between the two nations. With half of U.S. aluminum imports coming from Canada, the prolonged tariff policy could have wide-reaching effects on both economies.

Rio Tinto declined to comment on the matter. For now, all options remain open as Ottawa seeks ways to protect its strategic aluminum industry from escalating trade pressures.