Steel producers seek tariff relief
Canadian firms warn that U.S. duties may further curb investments, widen layoffs
Canadian steel producers OTTAWA are pleading with the federal government for relief from U.S. import tariffs, with some companies saying Canada’s plan to introduce its own levies next month could further diminish their already battered bottom lines.
The comments came during House committee hearings in Ottawa on Tuesday, where cashflow-starved Canadian firms warned that U.S. President Donald Trump’s tariffs on steel and aluminum had already stalled major capital investments in Canada, and could lead to widespread layoffs.
Conrad Winkler, the president and CEO of Evraz North America, said U.S. tariffs have had a “tremendous immediate impact” on the firm’s operations, and have even caused delays in U.S. pipeline projects, saying there has been a “reluctance” to ship large diameter pipe south of the border due to tariffs. The company has had to reconsider planned capital investments, he said.
The sentiment was shared by Sean Donnelly, president and CEO of ArcelorMittal Dofasco, Canada’s largest steel producer, who said the firm is reviewing $750-million worth of potential investments, and could lay off 1,000 staff if tariffs persist without support from the government.
The comments, made to the House International Trade committee, coincided with a meeting between provincial finance ministers and federal Finance Minister Bill Morneau to discuss possible responses to Trump’s trade policies.
The testimonies from steel companies Tuesday ratcheted up pressure on the federal government to provide some form of support for the industry, either by placing antidumping tariffs on foreign imports of steel, covering the costs of tariffs for Canadian firms, or supporting steel workers who lose their jobs, among other things. Canada already plans to introduce its own tariffs on imports from the U.S. July 1.
Morneau told reporters the issue was “critically important” but did not specify how Canada will respond. He said additional supports for steel firms could be announced in coming days.
Some observers have suggested a “support package” similar to what the federal Liberals gave softwood producers last year, which included loan guarantees and other backstops to lessen the impact of U.S. tariffs. Media reports suggest Morneau is crafting anti-dumping provisions to stem cheap steel imports from Asia and elsewhere, which have already flooded into Canada. Bloomberg News reported Tuesday that the government was considering the move, but Morneau did not confirm details.
Some firms cautioned against the federal government’s decision to introduce counter tariffs on various products imported from the U.S., saying additional levies threaten to force them out of business in a matter of months.
“We simply will not be able to continue operating,” said Robert Dimitrieff, the president of Patriot Forge Co., based in Brantford, Ont.
The company, which imports specialty steels from the U.S. to manufacture parts for steam turbines, gas compressors, military equipment and other products, would face an average of $682,000 in monthly tariffs if Canada introduces its own levy on goods from the U.S., Dimitrieff said. Patriot employs around 250 people.
The company already pays tariffs on some of the finished products it exports to the U.S., which accounts for the majority of its sales.
Other firms said Canada’s tariffs would simply double the pain caused by the Canada-U.S. trade war, forcing them to pay levies on products as they both enter and leave Canada.
ADF Group Inc., a Quebec-based company that manufactures steel used in commercial construction, said it will cost an extra $500,000 to carry out a contract for an airplane
We simply will not be able to continue operating.
hangar project along the Eastern U.S. coast due to both Canadian and U.S. tariffs.
The company is importing 14,000 tonnes of raw steel from the U.S. for the project, which it will then manufacture into finished products at its facility in Terrebonne, Que., and ship back to the U.S.
“It just kills us,” said James Paschini, a general manager at company, about the added cost.
Paschini said the firm has lost out on three other projects in the U.S. in recent weeks, worth several hundred million dollars, amid pressure on U.S. companies to comply with Trump’s “Buy American” plan.
Trade rifts and the threat of tariffs have caused U.S. companies to turn their backs on Canadian suppliers, company representatives said Tuesday. Many U.S. companies have cancelled orders with Canadian firms, and vice-versa.
“This plays right into president Trump’s agenda,” said Stephen Young, a manager at Janco Steel Ltd., a small steel manufacturer based in Hamilton, Ont.
Janco, which employs around 180 people, said its business in the U.S. plummeted 60 per cent in June due to the tariffs, as more of its American customers shift toward local suppliers to avoid import levies. Trump levelled the tariffs on June 1.
Young said “absolutely irreparable damage will be done” to the steel industry without its U.S. customer base, and called for an “immediate plan about how we will remain competitive.”