Trump tariffs could disrupt global can industry

By Keith Nuthall, in Ottawa; Liz Newmark, in Brussels; and Brenda Dionisi

The international can making and filling industry is assessing the impact of a second Donald Trump presidency in the US, given he has threatened to impose universal tariffs on all imports.

Trump has floated imposing 10%-20% tariffs on all US imports, including trades with countries having free trade agreements with America. For imports from China, the president elect has said he wants to impose 60% tariffs on all goods.

His formal election programme said: “Republicans will support baseline tariffs on foreign made goods, pass the Trump Reciprocal Trade Act, and respond to unfair trading practices.”

As for the Republican pledge to ‘secure strategic independence from China,’ Trump said that is administration would “revoke China’s Most Favoured Nation [MFN] status,” a key element of World Trade Organisation (WTO) rules. While the WTO does allow countries to rescind MFN status, which insists on common trade access, there are strict rules on scrapping MFN.

Rescinding MFN for China, for instance, would push the country into a tight club of WTO members Russia and Cuba, plus Belarus and North Korea (both outside the trade body), against whom there are few limits on trade barriers that can be erected. Indeed, the Biden administration has given future President Trump a useful precedent when stripping Russia and Belarus of MFN status following Russia’s full-scale invasion of Ukraine in 2022.

The WTO did nothing about this decision. Indeed, even if Russia had launched formal disputes proceedings, it could not have been enforced, because the US has been blocking the operation of the WTO’s appellate body, its highest disputes tribunal.

The Republican platform also committed a Trump administration to phasing out imports of essential goods from China, which could include canned foods, and “stop China from buying American Real Estate and Industries,” it said.

In north America, the platform said the Trump administration would review the 2018 US Mexico Canada Agreement (USMCA) in 2026, as per the agreement’s Article 34.7. This authorises a potential ‘joint review’ of the USMCA’s operation, discussing any party’s recommendations and decide on any appropriate actions, reviews that can be staged annually if a signatory government wishes for the next ten years, until the USMCA expires in 2036. Any party can quit the deal with six months’ notice.

Regarding the review, Trump said: “It’s coming due very soon. Oh, I’m going to have a lot of fun.” Given the integration of the American, Canadian and Mexican industries, this pledge, along the promise of duties, is causing alarm.

Brendan Sweeney, managing director of the Trillium Network for Advanced Manufacturing, in Ontario, said of Mr Trump’s election: “This is really unfortunate.” Noting that a 10% across-the-board duty would breach the USMCA, he stressed costs created by these duties would be paid by US and Canadian producers and consumers: “A calm and reasonable person might think twice about doing this,” he said.

The USMCA “will certainly be revised at the insistence of the Trump administration,” said Robert Budway, president of the USA Can Manufacturers Institute (CMI). “At the end of the day, I think we’ll see bilateral or multilateral agreements with a range of duties, some higher than others,” he told CanTech International.

Canada exports $10.8 billion-a-year in low-carbon primary aluminium, 80% of which is shipped to the US. “This makes us their biggest supplier of primary aluminium, and any additional tariffs on our products will obviously negatively impact Canadian producers but also the final consumers, who are south of the border,” said Jean Simard, president of the Aluminium Association of Canada (AAC).

Simard said there was a risk that the Trump administration decides to promote imports of lower cost aluminium from other countries like Russia, the United Arab Emirates or even China: “But he’ll have to decide who he wants to business with – with Russia or China, or with one of his closest allies?” he said.

“The Canadian government has been reaching out to US stakeholders to map out the industrial interests in the US that rely on Canadian imports, including aluminium,” said Simard. The ACC will push for retaliatory tariffs, in sectors and communities that would hurt support for Trump and such policies, should the US impose duties on Canadian exports: “Retaliation would have to be surgical, targeted and high impact, targeting sensitive US products or products that are important to Trump supporters,” said Simard.

“We’d have to mobilise the governors of [US] states that are reliant on imported Canada-made aluminium. About 750,000 people in the US are directly linked to the aluminium sector, so we if we upset the apple carts in these communities then that would make a difference,” he concluded.

Indeed, Budway said that “opponents of President Trump and even some of his allies are sounding the alarm on the potential inflationary impact of tariffs,” such as those being threatened on USMCA partners. They are not doing so about Chia, however. “I should note Congress, and the incoming administration, will maintain an intense focus on China. If behooves our industry to derisk from sourcing from China over the short and medium term not only for tariff reasons but also due to geopolitical risk,” Budway added.

The Winder Building, in Washington DC, the base of the US Trade Representative (USTR), which will impose tariffs ordered by Donald Trump. Image: ajay_suresh

The CMI is preparing a package of requests for the Trump Administration and Capitol Hill, said Budway. This includes significantly higher duties on Chinesemade can components and canned foods, which are a threat as they have the potential to undercut the prices of US produced can ends and bodies and, ultimately, US-grown and processed canned foods. The US can industry accounts for the annual domestic production of approximately 131.6 billion food, beverage, aerosol and other cans, generating about $15.7 billion in direct economic activity.

Across the pond, European Union (EU) can experts are considering the impact if Trump does fulfil his threat of imposing hard-hitting tariffs, which would disrupt trade and push up prices.

Moreover, US steel and aluminium tariffs are already in place, Antoine Moreau, EU policy and regulatory affairs manager at Profel– the European association of fruit and vegetable processors, told CanTech.

“Currently, European canned fruits face an import tariff of around 18 per cent in the US market. An increase of 10-20 per cent would mean that our products would become significantly more expensive and therefore less competitive in the US.

“The US market is of great importance for European canned fruits and vegetables,” he said. “It remains the biggest importer of canned peaches in the world, while at the same time maintaining an important local production.”

In 2023, the value of exports of European canned peaches (mainly from Greece and Spain) to the US exceeded EUR€93 million, surpassing China sales for the first time, he noted.

Moreau stressed that canned European products are already often more expensive than competition from China, South Africa and Argentina, so higher tariffs could see market share replaced by these competitors, although Trump has promised even more swingeing tariffs on China. Moreover, losses of major export markets might push product into domestic sales, depressing European prices, “and decrease total production in an already critical time for European agriculture,” Moreau added.

The European metals sector is also concerned. Sounia Mourabit, head of international trade and economy at European metals association, Eurométaux, noted several recent economic analyses suggesting “Trump’s tariffs may significantly disrupt European growth, intensify monetary policy divergence, and strain key trade-dependent sectors such as autos and chemicals.” She added: “The long-term effects on Europe’s economic resilience could prove even more significant if tariffs lead to protracted trade conflicts.”

That said, she stressed clarity is still lacking on future Trump trade policies and tariffs, “whether they will be universal, or sectors oriented.”

Indeed, Maarten Labberton, director of the packaging group at EU aluminium association, European Aluminium, said it looked “for the time being that Trump’s focus will be on China.” If the EU is hit: “Potential US tariffs will particularly hit consumer products, eg exported goods from Europe to the US, which could result in job losses and less income to those concerned.”

Steve Claus, secretary general, Steel for Packaging Europe, said, “following the US election and recent political transition in Europe,” his organisation has endorsed a joint call from European steel industry partners, supported by cross-party MEPs, for an EU Steel Action Plan, “designed to ensure steel’s competitiveness, facilitate the green transition, and protect jobs across Europe.”

In the UK, Jason Galley, director and chief executive of the Metal Packaging Manufacturers’ Association (MPMA), said: “Trump has form imposing tariffs, especially on Chinese goods, but election rhetoric rarely matches reality. And the reality is that whatever the imposition, business will adapt.

“Countries and trading blocs will inevitably adapt monetary policies to lessen negative impacts should they need to, and there will be other mitigating factors too: trade can be re-routed via other countries for example,” stressed Galley.

“It is in nobody’s interest to restrict trade,” the MPMA head added. “Trump will want to avoid inflationary measures, given that an improved cost
of living was central to his election victory.”

Rafael Sampson, manager, public affairs and public relations for European food and drink industry organisation, FoodDrinkEurope (FDE), said it was important to preserve good US trade relations, citing EU statistical agency Eurostat trade figures for 2022 showing €27 billion worth of food and drink exports (+19% versus 2021) to the US, with €6.5 billion worth of imports (+21% versus 2021) from the US.

Also, according to Eurostat, the EU imported €672,435 (43,231kg) worth of aluminium cans and other aluminium products from the US in 2023, a substantial increase over the €46,090-valued aluminium products (2,203kg) that entered the EU-27 in 2022.