Canada could financially back aluminum producers if 50% U.S. tariffs persist, trade group says

MONTREAL, July 5 (Reuters) - Canada has discussed offering financial support to large aluminum producers like Rio Tinto RIO.L impacted by a U.S.-led trade war, in the event that Washington's 50% tariff on imports of the metal persist in the medium term, the CEO of a key industry trade group said on Saturday.

Aluminium Association of Canada CEO Jean Simard told Reuters in an interview that the early talks could help the sector in the event that Ottawa is unable to reach a planned deal with its key trading partner by July 21.

While the major aluminum producers operating in Canada do not have liquidity problems, Simard said, a 50% U.S. tariff on aluminum imports would inevitably have an impact on finances if it continues.

"It's part of a larger discussion where everything is on the table," Simard said, adding that no decision has been reached. "With the 50% tariff in effect since June 4, it's normal that there are discussions, among other things, about the impact on businesses' liquidity if the situation persists over time."

Around half of all aluminum used in the U.S. is imported, with the vast majority coming from Canada, which exported 3.2 million tons of the metal to the United States last year.

Simard's comments follow media reports late Friday in which federal industry minister Mélanie Joly said the government is having conversations with Rio Tinto about providing financial assistance due to the crushing U.S. tariffs. Joly was said to have mentioned the talks during a meeting on Thursday with business leaders in Quebec’s Saguenay region, a significant hub for aluminum production also known as Canada’s Aluminum Valley.

Rio Tinto declined comment on Saturday. A spokesperson for Joly was not immediately available for comment.

U.S. President Donald Trump doubled tariffs on steel and aluminum imports to 50% last month, stepping up pressure on global steel producers and deepening his trade war, to support domestic production of the vital materials for construction.