Aluminum Tariffs Not Yet Cause for Panic in Kitimat

It’s "business as usual" in Kitimat, the northern B.C. community of nearly 9,000 residents that was founded on aluminum, after U.S. President Donald Trump imposed a 25 per cent tariff on the industry last week.

"People are concerned, of course, but there’s no panic," mayor Phil Germuth told The Tyee. "They’re cautious. We’re dealing with President Trump. You don't know what’s coming next."

The Kitimat aluminum smelter is among the largest in Canada and the only major smelter outside Quebec. It produces about 420,000 tonnes of aluminum every year, more than 80 per cent of which is exported to the United States, where it is used in everything from automobiles, airplanes and train cars to packaging, siding, cooking utensils and transmission lines.

Trump first announced tariffs on Canada and Mexico — the country’s biggest trading partners — in February, blaming its neighbours for illegal immigration and fentanyl entering the U.S. and threatening to annex Canada by repeatedly referring to it as the "51st state," and to Prime Minister Justin Trudeau as "Governor" Trudeau.

Trump initially said he would pause the tariffs, allowing time to comply with demands for tighter border security. Less than 0.2 per cent of fentanyl seized at U.S. border crossings came from Canada in 2024.

Trump moved ahead with tariffs on most Canadian goods earlier this month, with the White House saying that Canada and Mexico had "failed to adequately address the situation." Canada has responded with counter-tariffs.

U.S. tariffs on steel and aluminum went into effect last Wednesday, prompting more counter-tariffs from Canada.

In a statement issued by the Canadian government on March 12, Mary Ng, Minister of Export Promotion, International Trade and Economic Development, said that the tariffs violate international trade agreements, such as the Canada-United States-Mexico Agreement, often referred to as CUSMA.

Ng said she was "deeply disappointed."

"Canada is seeking formal consultations with the United States regarding the tariffs on steel and aluminum," Ng continued. "Instead of imposing unwarranted trade barriers, the U.S. should work with Canada as a trusted trade partner."

Germuth said the 25 per cent tariffs on steel and aluminum "don’t make a lot of sense."

"Canada and the U.S. have been such good trading partners for decades," he said. "It’s very, very clear that they don't have anywhere near enough aluminum production themselves to take care of their needs, so why would you go and put a tariff on the one country you’ve been working with that’s right next door to you?"

Aluminum is key to Kitimat’s economy

Kitimat was incorporated in 1953 as an "instant town" meant to provide housing and services for employees as the Aluminum Co. of Canada, or Alcan, prepared to begin operations at its smelter.

The smelter began operations the following year, using hydroelectricity produced by the Kemano Powerhouse, an underground hydroelectric generating station fed by the Nechako Reservoir. At the time, it was the world’s largest smelter powered by hydroelectricity.

Rio Tinto bought Alcan in 2007. Today, the Kitimat smelter, known as BC Works, accounts for about 14 per cent of Canada’s aluminum production.

The smelter employs more than 1,000 people and Germuth said a downturn in the industry would have a "massive effect on the economy, not just of Kitimat, but of this whole region," as the operation creates significant spin-off employment.

"There are a lot of businesses that also do a lot of work with the smelter," Germuth said. "We’re just waiting to see what happens here and hoping for the best."

So far, Rio Tinto says it isn't planning any layoffs.

The company declined The Tyee's interview requests, saying it is not commenting on the tariffs. But in a recent interview with the CBC, Rio Tinto chief executive of aluminum Jerome Pécresse said that no one should be worried about losing their job.

"As of today, with the current situation, there is no impact on jobs and there is no impact on our investments," Pécresse told CBC’s Daybreak North during a visit to Kitimat earlier this month.

Rio Tinto's Kitimat smelter is well positioned to provide low-carbon, high-quality aluminum to other markets. Because the facility is powered with hydroelectricity, the company says its aluminum has one of the lowest carbon footprints in the world.

Skeena-Bulkley Valley MP Taylor Bachrach told The Tyee that he has been speaking with industry representatives about the tariffs.

Canada’s aluminum industry, he says, is "well-positioned" in the face of "threats like this."

"Canada makes a product that is in demand around the world, not just in the United States," Bachrach said.

Canadian smelters, he continued, have access to international trade routes, making it possible to pivot to other markets.

But Bachrach added that given the "dynamic situation" with the U.S., there is still uncertainty and concern over the 1,500 regional jobs created directly and indirectly by the Kitimat facility.

"We need to do everything we can to protect that part of our economy," he said.

In an email to The Tyee, B.C.'s Ministry of Mining and Critical Minerals echoed the sentiment that the province's aluminum industry, which Rio Tinto says contributes over $500 million annually to the B.C. economy, is well-positioned to weather a trade war with the U.S.

"B.C. is an ideal location for aluminum production," a spokesperson wrote, "from our ports that provide access to Asian markets to having some of the lowest electricity rates in North America."

"We are supporting industries to diversify their trading partners internationally and are working with other provinces to remove trade barriers within Canada," the statement continued.

The ministry said it is looking to the Canadian government to use revenue from counter tariffs to support impacted workers and businesses, but that B.C. plans to "fill any gaps" in federal support.

"Trump’s unjustified tariffs are only going to accomplish one thing — hurt people, workers, and businesses on both side of the border," the ministry spokesperson wrote.

The province has also looked to the region’s expanding LNG industry and other natural resource projects to address potential economic downturns caused by U.S. tariffs.

Canada's first liquefied natural gas export terminal, LNG Canada, is expected to begin exporting this year. While the project is projected to create hundreds of permanent jobs in Kitimat once it becomes operational, that's a reduction over the nearly 10,000 construction jobs it supported in recent years.

In response to U.S. tariffs, the provincial government has also pledged to fast-track at least 19 natural resource projects that it says are close to "shovel ready," most of them in rural and remote areas.

Among those projects is Cedar LNG, a proposed floating LNG export terminal in Kitimat that is expected to create up to 500 construction jobs and employ about 100 people once it becomes operational, which isn't expected until late 2028.

Last week, the BC NDP also introduced the Economic Stabilization (Tariff Response) Act, a bill that, if passed, would allow cabinet to make regulations for "addressing challenges, or anticipated challenges, to British Columbia arising from the actions of a foreign jurisdiction."

The legislation would provide the provincial government the power to increase access to B.C. for goods and services from other Canadian provinces and territories, favour non-American companies in government procurement, and introduce tolls or fees on B.C. highways and ferries.

Germuth said that, while there are many reasons for Kitimat residents to remain positive about the future of its aluminum industry, risk remains.

"We all know what that smelter means to the community and the region, and even the provincial economy," Germuth said. "I think there's probably more hope than anything that this will work its way out one way or another."