The recent announcement of a 25% surtax on aluminum imports from China, scheduled to take effect on October 15, 2024, raises significant concerns for the Canadian beverage industry and other sectors reliant on aluminum can sheets. While the surtax is part of Canada's broader strategy to combat unfair trade practices and promote domestic production, its immediate impact on industries like beverage production could be deeply disruptive.

At present, Canada lacks domestic aluminum can sheet mills, meaning businesses must import these critical materials. The North American supply chain, particularly in aluminum production, is already constrained by rising demand and limited capacity. Even with ongoing investments, a significant increase in North American aluminum production isn't expected until after 2026, leaving Canadian producers in a vulnerable position for the foreseeable future.

The surtax on Chinese aluminum would exacerbate existing supply challenges and inflate costs for beverage producers, which could ultimately translate into higher prices for Canadian consumers at a time when affordability is already a national concern. Given that North American manufacturers cannot meet current demand, China remains a key supplier of aluminum can sheets. By imposing this surtax without a sufficient alternative supply, the Canadian government risks introducing instability into the aluminum supply chain, harming Canadian businesses and consumers alike.

Moreover, it is essential to recognize the potential long-term impact on industries reliant on aluminum, such as brewing and beverage production. If businesses are forced to absorb these increased costs or pass them on to consumers, the consequences could extend beyond short-term price hikes to include lost market share, job reductions, and weakened competitiveness.

While the government's desire to protect domestic manufacturing is understandable, a more measured approach would involve either exempting aluminum can sheets from this surtax or providing targeted remission orders to allow businesses time to adjust. Delaying the surtax's implementation until 2025 could provide the necessary breathing room for supply chains to stabilize and for producers to seek alternative suppliers.

Canada must strike a balance between protecting its industries from unfair competition and ensuring the continued viability of sectors heavily dependent on imported materials. A hasty implementation of this surtax could result in more harm than good, particularly in the beverage industry, which relies on aluminum can sheets to package products efficiently and affordably.

By reconsidering the timeline and scope of the surtax or offering relief measures, the government can mitigate disruptions, protect Canadian jobs, and ensure consumers aren't burdened with unnecessary price increases during an affordability crisis.

This op-ed was originally published on LinkedIn.