Countries except the U.S. that have free-trade agreements with Canada will be subject to 50-per-cent tariffs if they import more than 100 per cent of 2024 volumes of steel into the country.Chris Young/The Canadian Press
Ottawa is cracking down further on imports of foreign steel into Canada to help Canadian mills that have effectively been shut out of the U.S. market by President Donald Trump’s tariffs.
Less than a month ago, the federal government announced that steelmakers from countries such as China and Turkey that don’t have free-trade agreements with Canada will face tariffs of 50 per cent if they ship volumes into Canada that go above 100 per cent of 2024 levels.
Prime Minister Mark Carney announced at steel products company Walters Group in Hamilton on Wednesday that he is tightening that quota to half of 2024 levels.
In addition, countries that have free-trade agreements with Canada, other than the United States, will be subject to 50-per-cent tariffs if they ship more than 100 per cent of their 2024 volumes into Canada.
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Mr. Carney is brandishing a bigger stick in trade after the steel industry made it clear that last month’s moves didn’t go nearly far enough to protect Canadian steel mills from damage being caused by the Trump tariffs.
The government has acknowledged that the global steel tariffs imposed by Mr. Trump in March is likely resulting in foreign steel producers diverting shipments formerly destined for the U.S. market into Canada. That dynamic hurts Canadian steel mills because those producers are often selling metal into Canada at artificially low levels, a practice colloquially known as dumping.
“We must rely more on Canadian steel for Canadian projects, and those shifts start today,” Mr. Carney said at the announcement in Hamilton.
Before Mr. Trump imposed 25-per-cent tariffs on the steel sector in March, Canadian steelmakers shipped about half of their output, representing 90 per cent of their exports, to the U.S. After Mr. Trump doubled the tariff to 50 per cent last month, access to the U.S. market ground to a halt for Canadian companies.
To make up for a huge hole in their order books, Canadian mills have been trying to sell more steel in their home market. Only about one-third of the steel purchased in Canada goes to domestic mills, in part because dumped foreign steel is making domestic mills uncompetitive.
Evraz North America and Welded Tube of Canada on Wednesday announced they had filed an anti-dumping duty complaint with the Canada Border Services Agency. The steelmakers alleged that certain steel tube and pipe products originating from Mexico, the Philippines, Turkey and South Korea are being sold into the Canadian market “at unfairly low prices, causing significant and ongoing injury to Canadian manufacturers.”
Walt Koppelaar, chairman of Walters Group, who stood alongside Mr. Carney in Hamilton on Wednesday, said the new anti-dumping measures are “a good start, but we need to do more.”
He would like the government to mandate the use of Canadian steel in taxpayer-funded projects. While Ottawa has said it will prioritize the use of domestic steel for such projects, there has been no requirement to do so.
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Steel from Walters Group has been used for construction in numerous large Canadian infrastructure projects, including the Calgary Flames Arena, Brookfield Place in Toronto and Algoma Steel Group Inc.’s new electric arc furnace in Sault Ste. Marie, Ont.
“Canadian projects should be built by Canadian fabricators and not sent offshore,” Mr. Koppelaar said. “They should use Canadian steelmakers full stop, when it is taxpayer dollars at work.”
Keanin Loomis, chief executive officer of the Canadian Institute of Steel Construction, who also attended the announcement on Wednesday, called the government’s step “a huge improvement” over what was previously in place, particularly limiting imports of steel from China into Canada at much lower levels. China over the past few decades has grown to dominate world steel production and is largely responsible for creating a glut in capacity worldwide.
Mr. Loomis also underlined the importance of Mr. Carney reaching a trade pact soon with the U.S. that gives certainty to companies that are caught in the crossfire.
“The biggest issue out of all of this is just the uncertainty this has all created because of the fluctuations, the ups and downs, the closings, the openings,” Mr. Loomis said.
“Why would anyone, the public sector, or private sector, invest in anything at this point in time?”
The Prime Minister on Tuesday curbed expectations for a quick fix to the existing tariffs on both steel and aluminum, saying that he doesn’t think an agreement can be reached with Mr. Trump that removes all of the levies on Canada.
Rio Tinto PLC, which owns major aluminum operations in Quebec, said Wednesday that it incurred US$300-million in costs stemming from the U.S. tariffs on its Canadian aluminum exports in the first half of the year. A significant amount of the hit was offset by selling the commodity at a higher price in the U.S., a dynamic driven by the tariffs.
Meanwhile, Alcoa Corp. said the U.S. tariffs on Canada cost it US$115-million. Pittsburgh-based Alcoa operates three aluminum smelters in Quebec.
Mr. Carney also announced on Wednesday that the government is investing $70-million for training and income support to 10,000 steelworkers affected by the tariffs.
He also committed $1-billion to help steelmakers advance projects aimed at making them more competitive at home.
With a report by Laura Stone