Coalition of steel companies urge feds not to retaliate with tariffs
OTTAWA A coalition of steel companies is urging the federal government to back off of retaliatory measures aimed at the Trump administration, arguing the move will dramatically increase input costs and have a ripple effect across the broader Canadian economy.
The argument runs counter to those made by primary Canadian steel producers earlier this week, who have been calling on the federal government to introduce “safeguards” against a potential flood of non-u.s. imports of steel. The current coalition, composed of 16 steel manufacturers and business associations, said such a move threatens to choke off critical supply for downstream firms.
“Our only salvation is to get material from offshore,” said Anoop Khosla, the president of Midvalley Rebar Ltd, a Surrey, B.c.-based firm that imports rebar used in residential construction.
Khosla said prices for rebar have already increased 38 per cent in 2018, partly due to U.S. President Donald Trump’s tariffs. Further tariffs on rebar, steel plates, beams and other products used by manufacturers could raise the cost of large-scale construction projects, kicking off a cooling of the Canadian economy, the coalition argues.
“It could go into a tailspin in a very quick manner,” he said.
The coalition met with officials in the Prime Minister’s Office, Finance and Foreign Affairs on Thursday, pushing them to rethink the federal government’s pledge to introduce counter-tariffs and potential anti-dumping quotas.
On July 1, Canada plans to introduce tariffs on a variety of U.S. goods, including flat-rolled steel and other metals products. Separately, a Bloomberg report earlier this week suggested the federal Liberals are mulling tariffs and quotas on non-u.s. imports of steel and aluminum in a bid to stem “diversion” caused by the Trump administration’s tariffs, which some firms say threatens to swamp the market with new supply and depress prices. The Finance ministry did not immediately confirm whether it would introduce the tariffs.
Downstream manufacturers, for their part, say the move would only raise costs on the entire supply chain.
“Immediate safeguards is not the solution,” said Ed Whalen, president of the Canadian Institute of Steel Construction. “Our industries can survive as long as we have access to freely traded world steel. Our big concern is that if we don’t have access to that we’re in a world of trouble.”
In emergency House committee hearings earlier this week, Evraz North America said diversion away from the U.S. market had already caused a flood of new supplies for pipe and tubing products used in the energy sector. Steel producers Arcelormittal Dofasco, Stelco Holdings Inc. and others are calling on the federal government to introduce safeguards.
Tariffs on non-u.s. imports could be particularly damaging to coastal manufacturers who depend heavily on sellers in Brazil, China, South Korea and elsewhere.
Cory Pittman, the operations manager at Allstar Rebar Ltd., said the company imports 100 per cent of its rebar from foreign markets.
“If that supply is cut off, we may have to close our doors,” he said.
Allstar imports its rebar for between $30 and $50 per metric tonne, Pittman said, while switching to a domestic supplier might cost the St. John’s, Nfld.-based company $250 per metric tonne to bring product to its facilities.
Canada consumes roughly 1.2 million tonnes of rebar per year, about 300,000 tonnes of which comes from foreign markets outside of the U.S.
The American tariffs, introduced June 1, are part of a spillover from trade war escalations between China and the U.S., officials claim, and have raised fears over whether Canada’s economy could suffer if punishing tariffs persist.
In committee hearings earlier this year, U.S. Commerce Secretary Wilbur Ross said China was “masking ” its imports to the U.S. by channelling shipments through other countries.
Opposition Members of Parliament have been broadly supportive of the federal government’s tariffs, but some argue Canada could have avoided the levies by moving more quickly to introduce so-called “country of origin marking ” on steel and aluminum products, which would have satisfied U.S. demands.
“We should have taken those concerns seriously a year ago,” Conservative foreign affairs critic Erin O’toole said.
In his testimony, Ross said countries such as Canada are “complaining bitterly” about the tariffs, but suggested they were having their intended effect. He said “the fact is they are starting to take the kind of action which, if they had taken sooner, would have prevented this crisis.”