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US Revises Canadian Aluminum Tariffs: Will Only Impose Duties if Import Limits Exceeded

Hours before Canada was expected to make an official statement sanctioning the U.S. for its aluminum tariffs, the United States Trade Representative announced it would revise the aluminum tariff policy it announced in August that charged 10% duties on all aluminum products imported from Canada.

Going forward, the U.S. will only charge 10% tariffs if monthly aluminum imports spike unexpectedly. In a press conference, Deputy Prime Minister of Canada Chrystia Freeland confirmed that Canada would back down on its own plans to impose “dollar-for-dollar” trade countermeasures in light of the USTR’s decision.

According to a USTR statement, the tariff revision came after consultations with the Canadian government indicating that trade in non-alloyed, unwrought aluminum is likely to stabilize in late 2020.

After those discussions, the United States said it would resume duty-free treatment of affected shipments, retrospective to September 1, provided imports stay within below monthly “expected values” of 83,000 tons in September and November and below 70,000 tons in December.

If shipments for a given month exceed 105% of the “expected values”—for example, if Canada exports more than 73,500 tons of aluminum to the U.S. in September—the United States will retroactively impose a 10% tariff on all shipments made for the relevant month and consider re-imposing the August 10% tariff.

Deputy Prime Minister of Canada and Minister of Finance Chrystia Freeland said Canada would not impose its own tariffs on the United States and welcomed the decision to drop the duties, which she called “unacceptable.”

“Canada is not a threat to U.S. national security,” she said at a press conference Tuesday. “Aluminum trade between Canada and the U.S. has long been mutually beneficial for both our countries, and tariffs would have harmed workers and industry on both sides of the border, disrupting linked supply chains that have made North American aluminum more competitive around the world.”

She did warn, however, that Canada remained “prepared” to reimpose the counter-tariffs if the U.S. reneged and imposed tariffs anyway, and said that the U.S.’s decision was not a negotiated agreement.

The Canadian and U.S. Chambers of Commerce both cheered the decision to drop the tariffs. “What American manufacturers need now is certainty that these tariffs won’t make another reappearance,” said U.S. Chamber of Commerce Head of International Affairs Myron Brilliant.

The Senior Director of International Trade at the Canadian Chamber of Commerce, Mark Agnew, also welcomed the lifting of tariffs but said the actions of the United States were a unilateral and unjustified attempt to change market forces.

“The United States has not unconditionally lifted its tariffs on Canadian aluminum and continues to seek to restrict market-driven trade flows,” said Agnew. “We call on the United States to fully and without precondition remove the threat that tariffs could be re-imposed in the future.” He went on to say that removing the threat of tariffs would provide certainty for Canadian and American businesses.

The United States Trade Representative said it would consult with the Canadian government at the end of 2020 to review expected aluminum market conditions for the first four months of 2021.

How do you define “world-class” when it comes to a supply chain? What are the characteristics that separate the good from the great, that differentiate between companies that are doing fine from those that are doing fantastic? For the past 16 years, analyst firm Gartner has offered a way to at least partially answer those questions through its Top 25 Supply Chains program.

Gartner begins the process of determining the world’s best supply chains by narrowing the focus pretty dramatically. For starters, only public companies with annual revenue of over $12 billion are considered; to thin the herd even further, only companies in the manufacturing, retail and distribution industries are evaluated. Among the industries excluded from the Top 25 rankings are: airlines, railroads, trucking companies, package delivery companies, shipping companies, construction firms, entertainment, healthcare, metals producers, energy companies, banks, oil & gas, pipelines, and utilities. So many companies who are actually in the business of supply chain management aren’t actually eligible for the Top 25 program.

That being said, there’s really no other supply chain ranking comparable to the Gartner Top 25, which is why we take a close look at their findings every year. The analyst firm focuses on several key metrics in its evaluation, and they’re constantly tweaking and updating their methodology to get as close as possible to a true representation of best practices in the supply chain arena. One of the key metrics new to the 2020 rankings is return-on-physical assets (ROPA), replacing the return-on-assets (ROA) measure used in previous years. ROPA accounts for 20% of the total score assigned to each eligible company.

Gartner is also now referring to environment, social and governance (ESG) practices, rather than the previous corporate social responsibility (CSR) label, though there still remains a bit of a disconnect between what a company claims to be doing on the sustainability front and what they’ve actually accomplished. ESG accounts for 10% of the score. Revenue growth and inventory turns, respectively, also account for 10%.

The other 50% of the score is basically based on opinion and reputation: 25% is based on the opinions of 44 Gartner analysts, and 25% is based on the opinions of peer voters (supply chain practitioners, professionals and experts; in the interests of full disclosure, I am part of the peer panel). So there is a bit of a popularity contest feel to the final results.

According to Gartner’s analysts, the three key factors differentiating best-in-class supply chains this year are being purpose-driven organizations, business model transformers and digital orchestrators. Those are all good buzzwords, but what exactly do they mean? In our analysis that follows, we’ll take a closer look at what these companies are doing that makes them so good at supply chain management.

Before we get to the Top 10, though, let's take a look at the companies that sit on the periphery of that exalted list, namely numbers 11-25. For those of you keeping score at home, six new companies made it into the Top 25 this year (indicated in bold below), with computer maker Lenovo making the most impressive debut, all the way up to 15.  And of course, six companies had to drop off the list to make room for the new ones; missing from the Top 25 this year are Novo Nordisk, Home Depot, Samsung Electronics, BASF, Adidas, and Akzo Nobel.

25. Kimberly-Clark

24. Biogen

23. Reckitt Benckiser

22. 3M (17)

21. British American Tobacco,

20. H&M (16)

19. Starbucks (9)

18. BMW (25)

17. AbbVie

16. Nike (10)

15. Lenovo

14. Diageo (12)

13. Coca-Cola (20)

12. HP Inc. (7)

11. Walmart (14)

Before we get to the Top 10, a quick reminder from previous lists that Gartner came up with a "Masters" category a few years ago. Companies that score in the top five for at least seven out of the last 10 years are moved off the Top 25 list into a separate category that recognizes their "sustained leadership" (while also making it possible for some new companies to make it into the Top 10). So you won't see supply chain stalwarts Amazon, Apple, McDonald's, Procter & Gamble, or Unilever in the Top 10 because they're in a class of their own.

If you'd like to take a look at previous Top 25 slideshows, you can click on any of the links below:

Top 25 Supply Chains of 2019

Top 25 Supply Chains of 2018

Top 25 Supply Chains of 2017

Top 25 Supply Chains of 2016

Top 25 Supply Chains of 2015