Steel coils at ArcelorMittal Dofasco's steel mill on in Hamilton. The steel industry is reacting with concern after Prime Minister Mark Carney said he doesn't see a path to a trade deal with the U.S. that fully removes tariffs.Cole Burston/Getty Images
Canada’s steel industry is warning of severe damage to come as Prime Minister Mark Carney tempers expectations for a tariff-free economy, while the auto, agricultural and energy sectors push for no trade levies at all.
Mr. Carney on Tuesday said that he doesn’t believe an agreement can be reached with U.S. President Donald Trump that removes all tariffs on Canada.
“There is not much evidence at this moment of agreements, arrangements, or negotiations with the Americans for any country, any jurisdiction, to have a tariff-free deal,” Mr. Carney said in Ottawa.
Mr. Trump in March imposed 25-per-cent tariffs on the Canadian steel and aluminum sectors, citing national security concerns over U.S. dependency on foreign imports. In June, he jacked up the tariffs to 50 per cent.
Catherine Cobden, chief executive officer of the Canadian Steel Producers Association, said the doubling of the levy effectively shut Canadian mills out of the U.S. market. Before the trade war began, Canadian producers routinely sent about half of their output to the United States.
Tony Keller: The market is in denial. Trump wants higher tariffs, and he’s getting them
Canadian steel production already plummeted by 30 per cent in May, when the U.S. tariff was at the lower rate. Ms. Cobden is now bracing herself for a far worse number once data for June and July comes in that will factor in the higher tariff.
“We can see that order books are in very bad shape as we sit here in July,” she said.
“I hesitate to think of what kind of state we’re going to be in if we have to hang on much longer without action.”
Algoma Steel Group Inc. CEO Michael Garcia said that as bad as the 50-per-cent tariff is for his company, at this point any deal on tariffs would provide relief, as the uncertainty is hurting the most. Sault Ste. Marie, Ont.-based Algoma is one of Canada’s big three primary steel producers.
“It is quite urgent that there is a deal reached, whatever the tariff rate in that deal, just the near-term certainty that would provide is critical,” said Mr. Garcia.
Without certainty over what any long-term steel tariff might be, Algoma is unable to plan for the future.
“If there’s an announcement on August 1 that sets the tariff rate for steel to – pick a number – that’ll still be better than the situation we find ourselves in today,” he said.
Mr. Carney is scheduled to visit a steel manufacturer in Hamilton Wednesday, where a source said he is expected to announce support for Canadian steelworkers.
The Globe and Mail is not identifying the source because they were not authorized to discuss the matter publicly.
To help the ailing Canadian steel sector gain more market share at home, Ottawa recently rolled out quotas for foreign mills that sell metal into Canada. For any countries that don’t have free trade agreements with Canada, if they ship above 2024 levels, they will face tariffs of 50 per cent.
But Canadian steelmakers want the Canadian government to go far beyond those steps. They are calling for quotas to be levied on many other countries that have free trade agreements with Canada, such as South Korea and Vietnam. The Canadian Steel Producers Association says these countries routinely dump steel into this country. Dumping is selling at artificially low prices in order to gain market share.
The Canadian auto industry has consistently said trade with the U.S. has to be tariff-free. The cross-border industry is highly integrated and built on decades of free trade. Canada’s advantages – a cheaper dollar and public health care – cannot withstand the added costs of 25-per-cent tariffs, the industry claims.
Opinion: Trump doesn’t hold all the cards on international trade
No tariffs are acceptable, said David Adams, CEO of Global Automakers of Canada, which represents the largest automakers in the country, Toyota Motor Corp. and Honda Motor Co. Ltd., and several overseas brands.
“That’s the agreement the President negotiated himself five years ago,” Mr. Adams said. “That’s what we should be honouring.”
Tariffs are a barrier to new investments in auto plants and, in the long term, make it hard to keep factories operating, Mr. Adams said.
“The objective has to be total tariff elimination,” said Brian Kingston, president of the Canadian Vehicle Manufacturers’ Association, which represents Ford Motor Co., General Motors Co. and Stellantis NV in Canada.
Mr. Kingston said Mr. Trump needs to view Canada differently than he does other trading partners, given the two countries’ integrated supply chains and economic interdependence.
“Canada is the most important trade destination for the United States, by far,” Mr. Kingston said. “The Americans send more cars to Canada than they do to China, Mexico and Germany combined. The Americans need us. We need them. So, all of the ingredients are there for a mutually beneficial agreement, and I hope that we can still get to one.”
The vast majority of Canadian agricultural exports to the U.S. comply with the United States-Mexico-Canada trade agreement and therefore are not subject to tariffs.
“It is really important not to sacrifice that in order to solve issues for other industries,” said Michael Harvey, Executive Director of the Canadian Agri-Food Trade Alliance. “It’s very important that the country not accept broad-based tariffs on everything.”
Earlier this year, the Trump administration imposed a 10-per-cent tariff on Canadian oil and gas exports. The charge was levied only on exports that were not USMCA-compliant. Alberta’s Energy and Mines Ministry has estimated that as much as 98 per cent of the province’s oil and gas exports are compliant under the trade agreement, said Sam Blackett, a spokesman for Alberta Premier Danielle Smith.