At the request of two domestic uranium producers, the US Department of Commerce (DOC) has launched an investigation into whether "the present quantity and circumstances" of uranium imports threatens national security.
Created to be used during the heightened tensions of the Cold War, it has rarely been invoked - until recently when someone on Trump's staff told him how he could declare tariffs on foreign imports if they are deemed to "threaten to impair the national security" of the U.S. The administration has used the clause to impose steel and aluminum tariffs on Canada and other trade partners and U.S. Commerce Secretary Wilbur Ross is still investigating imported automobiles and auto parts because they might pose a threat to our national security.
He pointed to a drop in U.S. production of uranium, which is used to power 99 commercial reactors, the U.S. Navy's nuclear submarines and aircraft carriers, and in the country's nuclear weapons arsenal. He promised a "thorough, fair and transparent review".
The investigation is similar to the one undertaken by the United States before it imposed tariffs on imports of steel and aluminum from several countries including Canada.
"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", he said in a statement.
Cameco President and CEO Tim Gitzel said, "If the issue in question is the over-reliance of the United States on uranium supplied by state-controlled enterprises from countries not aligned with American policy interests, this clearly does not apply to Canada or Cameco".
In January, the US Department of Commerce approached US uranium producers Energy Fuels Inc. and Ur-Energy Inc. with a request to investigate this matter in accordance with the section 232 of the Trade Expansion Act of 1962.
Saskatoon-based Cameco Corporation mined nearly 24 million pounds of uranium previous year, and nearly 80 percent of it was sold to the USA, according to data compiled by Bloomberg. That is 50 percent lower than just a year earlier. "While the USA does not import significant quantities of uranium from China at this time, China has grown significantly their state-owned nuclear enterprises and announced that they intend to penetrate the U.S. nuclear market with nuclear fuel that will compete directly with USA uranium miners".
Prices have since bumped up to about $23 a pound following production cuts at leading producers KazAtomProm in Kazakhstan and Cameco Corp.in Canada.
Entergy Corp. and FirstEnergy Corp., operators of nuclear power plants, led decliners on the S&P 500 Utilities index, falling as much as 1.7 per cent and 1.9 per cent respectively.
Canada and the United States are staunch military allies and Canadian uranium is not a threat to USA national security, said Adam Austen, a spokesman for Foreign Affairs Minister Chrystia Freeland.
U.S. Commerce Secretary Wilbur Ross testifies before a Senate Finance hearing on "Current and Proposed Tariff Actions Administered by the Department of Commerce" on Capitol Hill in Washington, U.S., June 20, 2018. But they say they have laid off roughly half of their combined employees and are operating at just 9 percent and 13.5 percent of capacity, respectively.
In their petition, the companies proposed import quotas that would reserve one quarter of the US market for domestic uranium production.
The investigation comes a day before the department holds a hearing on whether the imports of automobiles and automotive parts threaten US national security.