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Canada Grants Coatings Tariff Exemption

Tuesday, July 10, 2018

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With concerns over countermeasure tariffs on U.S. goods rising, the Canadian government has granted the Canadian Paint and Coatings Association’s request for an exemption from these tariffs, as language could be interpreted to include pails, cans, vats and totes used by Canadian paint and coatings manufacturers.

Since there is no Canadian manufacturer of these pails and cans, including architectural paint and aerosol sprays, manufacturers based in Canada would face an increase of millions of dollars in higher input costs compared to equivalent products imported from the United States. The tariff on U.S. goods going into Canada went into effect July 1.

Tariff Measures

Canada, the single largest exporter of steel to the U.S., and Mexico were both originally exempt from the tariffs during U.S. attempts to renegotiate NAFTA, the free-trade agreement among the North American countries. In late April, the U.S. announced that those two countries, along with the EU, Argentina, Brazil and Australia, would have continued exemptions from the tariffs until at least June 1.

© iStock.com / Rafal Olkis

With concerns over countermeasure tariffs on U.S. goods rising, the Canadian government has granted the Canadian Paint and Coatings Association’s (CPCA) request for an exemption from these tariffs, as language could be interpreted to include pails, cans, vats and totes used by Canadian paint and coatings manufacturers.

Canadian Foreign Minister Chrystia Freeland said before the tariffs took effect that the country would “respond appropriately” if the duties were imposed.

Tariff Exemption

CPCA President and CEO Gary LeRoux noted that North American paint and coatings industry is significantly integrated with a number of U.S.-owned companies running manufacturing facilities in Canada, which are aided by cross-border supply chains.

“These tariffs could be the last straw for many Canada-based manufacturers, especially small- and medium-sized enterprises, already considering possible relocation to U.S. jurisdictions with lower taxes, fewer regulations, lower energy and labor costs, ongoing exchange rate challenges, and other incentives for plant relocation,” LeRoux said.

Thanks to consolidation, almost half of all paint and coatings products sold in Canada are imported from the United States, marking a nearly 15 percent increase over the last decade. The same consolidation has contributed to the closure of Canadian manufacturing plants, forcing many companies moving head offices to the States.

   

Tagged categories: Coating Materials; Economy; Government

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