The Quad Report

Donald Trump is rattling a new tariff saber – pointed directly at Canada. It also threatens another long-time U.S. ally, Australia. Commerce Secretary Wilbur Ross says he will open an inquiry into whether the U.S. should impose tariffs on foreign uranium in the name of national security, the universal hook upon which the Trump administration is hanging much of its trade policy.

The administration action comes after two U.S. companies in January complained to the government about uranium imports, seeking quotas under Section 232 of the 1962 trade act. According to the Washington Post, Energy Fuels and Ur-Energy want to guarantee 25% of the U.S. uranium market for U.S. companies, regardless of the costs.

Ed Lyman, a nuclear non-proliferation expert at the Union of Concerned Scientists, told the Washington Post, “The national security argument is ridiculous.”

The likely result of a tariff on uranium would be increased threats to currently-marginal U.S. nuclear power plants, which the administration has said it wants to keep running. For that reason, the Nuclear Energy Institute, the U.S. lobbying group for atomic energy, opposes the petition of the two domestic uranium producers. NEI President Maria Korsnick said that “NEI does not support the implementation of quotas as described in the petition. Potential remedies could put even more generating units at risk for premature closure, which would further soften the market for uranium.” NEI is touting a study by the NorthBridge Group that the quota proposed by the U.S. firms would add $500 million to $800 million a year to the costs of U.S. nuclear-produced electricity.

Uranium trades in a worldwide, competitive market. Today, the uranium market faces a glut of excess production capacity, in part because of the impact of the Fukushima nuclear disaster, which crippled nuclear power production and led Germany to decide to close its significant nuclear power sector. In the U.S., nuclear power has been in a slow, steady decline for close to 40 years, and many plants are unable to compete in competitive wholesale electric markets, which now account for half of the U.S.

Canada and Australia account for more than half of the consumption of uranium in the U.S. The Financial Post, Canada’s national business newspaper, quoted Ken Neumann, the Canadian director of the United Steelworkers, representing the workers in the Canadian mining and processing industry, “Targeting Canada’s uranium industry would be absurd and would suggest a deliberate escalation by the Trump administration – for its own political purposes – of a trade war with America’s closest ally.”

Canada has already been swept up in Trump’s tariffs imposed on foreign steel and aluminum, and specific 30-35% tariffs on newsprint, another major Canadian export to the U.S., which threatens the survival of many small and medium-sized newspapers. There is only one small U.S. paper mill making newsprint, in Washington state.

The Commerce Department announcement of its inquiry into uranium imports is broader than raw uranium, which could raise additional concerns for the U.S. nuclear power industry. The agency said, “The investigation will canvass the entire uranium sector from the mining industry through enrichment, defense, and industrial consumption.”

— Kennedy Maize