Sault Ste. Marie, Ont.-based Algoma Steel has been trying to win more business at home, but years of cheap foreign steel imports have made it harder for the company.Sean Kilpatrick/The Canadian Press
Algoma Steel Group Inc. ASTL-T chief executive Michael Garcia says the federal government’s new quotas around imports of steel fall far short of what is needed during a vicious trade war with the United States.
Prime Minister Mark Carney in a news conference in Ottawa on Thursday announced that Canada is limiting imports of foreign steel from countries that don’t have free trade agreements to 2024 levels. If the group of countries, which includes major steel producers such as China, India and Turkey, ships above that quota, 50-per-cent tariffs will take effect.
In an interview, Mr. Garcia said that while the quotas are “a good first step,” much more needs to be done to tackle what has become a systemic problem for the Canadian steel industry.
“It’s not going to make much difference with the challenges we’re facing,” he said.
That’s because the amount of foreign steel that was purchased by Canadian importers last year, and in the few years before that, was already extremely high – making up about two thirds of the market.
Sault Ste. Marie, Ont.-based Algoma Steel has been trying to win more business at home to make up for lost revenue in the U.S. But years of cheap foreign steel flowing into Canada has made it much harder for the company to compete. Founded in 1901, Algoma is one of Canada’s big three steel producers alongside ArcelorMittal Dofasco and Stelco.
President Donald Trump in early June doubled tariffs on almost all the U.S’s foreign steel imports to 50 per cent, a level that makes it virtually impossible for Canadian producers to compete in the U.S.
Trump hikes steel and aluminum tariffs to 50%
Mr. Garcia in his prior conversations with the federal government had pushed Ottawa to limit foreign steel imports to 25 per cent of 2024 levels. In addition, he wanted those quotas applied to steel-making countries that have free trade agreements with Canada, such as mills in the European Union, South Korea and Vietnam, all of which he says dump steel into Canada. Dumping is selling at an artificially low price to gain market share.
Industry Minister Mélanie Joly in a statement to The Globe and Mail said she’s in regular contact with Algoma and the entire Canadian steel industry and that she is continuing to work on finding solutions through collaboration.
Mr. Carney at this week’s Group of Seven summit in Kananaskis, Alta., said that he and Mr. Trump are working toward a comprehensive trade and security deal within 30 days to end the trade war.
Carney vague on aims of 30-day time frame for U.S. talks
Regardless of whether the trade war gets solved within 30 days, Mr. Garcia says that Canada needs to tackle the fundamental problem of such an important industry that Canadians used to be much bigger players in being dominated by foreigners.
“There’s something systematically wrong with the landscape of the Canadian steel market,” Mr. Garcia said. “It needs to be addressed, not only because the current situation is urgent and volatile, but long-term, over the next 10, 20, 30 years, I think for a strategic, secure steel industry, you want your domestic companies to supply the majority of your needs.”
But not all Canadian steel sector stakeholders are taking issue with Canada’s response to the trade war.
Jim Ritchie, owner of Vancouver-based steel distribution company Cascadia Metals Ltd., said that Mr. Carney’s new measures on steel imports is a well-reasoned response to what is a very difficult situation.
“Mark Carney is trying very hard to not to damage the Canadian economy, and at the same time trying get a deal done with Trump, and take the knives out of his back from the Canadian steel producers,” Mr. Ritchie said.
He’s relieved that Ottawa did not clamp down too hard on foreign steel imports because that would have hurt his business. He services about 4,000 Canadian customers, some of which buy Canadian steel, but others need to buy foreign metal.
Prime Minister Mark Carney in a press conference in Ottawa on Thursday said the government will attempt to limit steel imports from countries that don’t have a free-trade agreement with Canada to 2024 levels.
The Canadian Press
A major downside for Mr. Ritchie stemming from the restrictions on imports is the amount of new administrative work it will create. The company already had to set up a new department to deal with the “melt and pour” regulations that Ottawa rolled out last year that identifies where steel coming into the country originates.
“We have full time employees just to give information to the government,” he said.
“Now this is going to take even more, because when you have a quota system, we’re going to have to set up bonded yards.”