On Monday, U.S. President Donald Trump announced 25-per-cent tariffs on steel and aluminum imports into the United States, including from Canada.
Here’s a look at how much of those metals and products Canada supplies to the U.S., and what kind of an impact the tariffs could have on the Canadian economy.
Last year, Canada shipped US$24.4-billion worth of aluminum and steel south of the border, equivalent to $35-billion, according to the U.S. Census Bureau.
Canada is by far the largest source of aluminum to the U.S. That includes unwrought aluminum, as well as wire, waste, pipes and other manufactured products.
Likewise, Canada is the largest source of imported iron and steel. According to the Canadian Steel Producers Association, roughly $20-billion in steel is traded both ways between Canada and the U.S. each year.
“While the target of Canadian steel and aluminum is completely baseless and unwarranted, we must retaliate immediately,” said Catherine Cobden, president and CEO of the CSPA, in a statement.
Mr. Trump’s move to hit imports of steel and aluminum echoes actions he took during his first presidency.
In May, 2018, the U.S. imposed a 25-per-cent tariff on steel imports and a 10-per-cent tariff on aluminum imports. Over the next year, Canadian exports of steel and aluminum fell by around 20 per cent, before rebounding after the U.S. reached a deal with Canada and Mexico to lift tariffs on the two countries.
“It seems reasonable to expect a similarily-sized fall this time given that exports to the U.S. today are roughly where they were in February 2018, when tariffs were first announced,” wrote Bradley Saunders, North America economist with Capital Economics, in a report. “The scope for Canadian producers to boost exports to other countries to offset the hit to demand will be limited, given that around 90 per cent of Canada’s steel and aluminum products are set to the U.S.”
Despite the shock from steel and aluminum tariffs, Mr. Saunders said the impact on Canada’s economy “should be limited” since exports of those products account for just 1 per cent of Canada’s gross domestic product.
That said, not every province is equally exposed. Quebec and Ontario will feel the biggest impact from tariffs, according to a note from Bank of Montreal economist Robert Kavcic.
Quebec exported roughly $14-billion of those products, mostly aluminum, accounting for just under 2.5 per cent of GDP. Ontario exported $16.3-billion of mostly steel products but due to the larger size of its economy, those exports accounted for just under 1.5 per cent.
It’s unclear yet what impact tariffs would have on employment in the steel and aluminum industries.
In a statement, Bea Bruske, president of the Canadian Labour Congress, warned 43,000 Canadian jobs are directly or indirectly at risk from the tariffs.
Between 2018 and 2019, the number of jobs in primary metal manufacturing actually increased slightly, temporarily reversing a 10-year declining trend, but in 2023 the number of jobs in the sector was back below where it was in 2018.
Meanwhile employment in metal ore mining has continued to expand.