Analysis: Quebec’s Aluminum Product Producers and Trump’s Tariffs

Overview

• Industry Impact: Quebec’s aluminum product sector, comprising ~1,700 companies, is facing significant challenges due to U.S. tariffs imposed by President Donald Trump.
• Geographic Focus: Half of these companies are located in the greater Montreal area.

---

Key Facts and Data Points

Tariff Structure

• Scope of Tariffs:
  • Apply to both primary aluminum and finished aluminum products.
  • Include retaliatory tariffs from Canada, potentially compounded by suspended tariffs tied to fentanyl smuggling and illegal immigration.

Company-Specific Challenges

Bousquet Technologies

• Revenue: ~$50 million annually.
• U.S. Market Dependency: U.S. represents ~20% of sales; targeted for growth.
• Strategic Response:
  • Workforce reduced from 180 to ~165 employees.
  • Factory operates on a four-day workweek under the federal government’s work-sharing program.
  • Plans to reorganize supply chain and lower prices to maintain U.S. market share.

Cyrell AMP

• Revenue: $25 million annually, with 80 employees.
• U.S. Business Impact:
  • Lost sales estimated between $1.5–$2 million due to tariff-induced instability.
  • Reduced staffing by 10% and cut factory hours from 40 to 35 per week.
• Strategic Response:
  • Explore European markets but faces competition from established local players.
  • Consider expanding into other Canadian regions, though U.S. business remains more accessible.

ALU MC3

• Revenue: $12 million annually, with 45 employees.
• Market Dynamics:
  • ~25% of sales to U.S. customers, previously achieved by being cheaper and faster than U.S. competitors.
  • Tariffs complicate supply chain, increasing costs for raw materials and finished products.

General Industry Impact

• Supply Chain Complexity: Aluminum can cross the border multiple times before becoming a finished product, leading to compounded tariff effects.
• Price Pressures:
  • Higher costs for primary aluminum due to tariffs and Midwest premium.
  • Retaliatory tariffs on U.S.-sourced aluminum extrusions.

---

Market Trends and Business Impact

Competitive Dynamics

• U.S. Advantage: American competitors benefit from reduced prices due to the absence of tariffs, putting Canadian firms at a disadvantage.
• Global Trade Shifts: Tariffs disrupt traditional supply chains and create uncertainty in cross-border trade.

Strategic Considerations

• Adaptation Strategies:
  • Companies are seeking tariff exemptions, supply chain reorganizations, and alternative markets (e.g., Europe or other Canadian regions).
  • Focus on cost-cutting measures, including reduced staffing and production hours.
• Long-Term Effects: The tariffs may lead to permanent shifts in market dynamics, with companies reevaluating their global trade strategies.

Regulatory Impacts

• Retaliatory Tariffs: Canada’s retaliatory tariffs add complexity, affecting both imports and exports between the two countries.
• Uncertainty: The unpredictable nature of tariff policies creates ongoing challenges for business planning.

---

Conclusion

The U.S. tariffs on aluminum products are causing significant distress in Quebec’s aluminum sector, with companies facing reduced sales, workforce layoffs, and supply chain disruptions. While firms are exploring strategic responses such as market diversification and cost-cutting measures, the long-term impacts of these tariffs remain uncertain. The situation highlights the challenges of navigating complex global trade policies and underscores the need for adaptive strategies in competitive markets.