Donald Trump just went back on the offensive with Canada, reviving a tariff on the country’s aluminum shipments. But thanks to some oddities in the metal market, producers in the Great White North could escape without incurring a full blow from the duty.

The freshly reinstated fees only apply to raw metal. That leaves the door open for U.S. companies to import Canada’s finished products made from aluminum -- auto parts, jet bodies and machinery -- free of duties. The loophole could be especially relevant now that many analysts expect that the economy is past its trough, meaning demand for the value-added parts is only expected to increase in the months ahead.

That could be a saving grace for the Canadian industry, which supplies about half the aluminum consumed in America. Not only would it help them skirt the tariff issue, but value-added products also provide better margins. Demand for the finished products had slumped during the pandemic, but could now start to ramp up again as car factories and other businesses come back online.

“I’d say Canadian producers -- Alcoa and Rio Tinto -- will likely shift whatever tons they can to value-added products versus primary ingot to avoid the ‘tax,’” said Andrew Cosgrove, a senior analyst at Bloomberg Intelligence. “But it will be limited by the speed at which downstream demand recovers.”

Trump’s move to reimpose the tariff came just weeks after the president’s landmark North American trade agreement went into effect. The president may be trying to position himself as leader on the economy before the November election, but tariffs will likely drive up costs for end users such as brewers. Meanwhile, a shift by Canadian companies into more value-added products could help to bolster their earnings.

Alcoa Corp., the biggest U.S. producer that also has smelters in Canada, said in May that the company shifted its mix of value-added products to 45 per cent of total production, down from 55 per cent, due to the drop in demand from the pandemic.

But the company last month said that “high-level” manufacturing data for aluminum end markets was showing signs of improvement in North America and Europe in May and June. A company spokesman said in a telephone interview that imports of commodity grade metal will decrease as the economy improves, indicating that already the Pittsburgh-based producer will boost its value-added product mix as demand warrants.

To be sure, there’s only so much benefit that Canadian producers can gain from sales of value-added products. There’s no guarantee that the recovery will be steady -- a spike in virus infections could lead to more shutdowns and sudden drops in demand.

There’s also a likely ceiling on how much finished product Canadian producers would be able to ship before facing the possibility of duties on those exports as well. Jorge Vazquez, managing director at researcher Harbor Intelligence, estimates that figure would be about 1 million metric tons, based on trade agreements between the countries that took into account historical averages.

Even with that cap, Canadian producers could benefit close to US$200 million from the increased sale of value-added products, he estimates.

“More than 1 million tons and they’ll jeopardize their exemption, but below that they’re going to benefit close to US$200 million, which would be a windfall,” Vazquez said.