Hamilton steelmakers dodge tariff after Trump changes mind
Tough road still ahead in NAFTA talks
Steelmakers in Hamilton and elsewhere in Canada have dodged Donald Trump’s tariffs for now, but problems in doing future business in the U.S. are far from over, analysts say. With the announcement Thursday by the American president that Canada and Mexico will be exempt from a 25 per cent tariff on steel and 10 per cent tariff on aluminum, eyes now shift to the ongoing North American Free Trade Agreement talks.
“It’s still big trouble, I think ” says University of Toronto steel analyst Peter Warrian. “Yes it is some relief that we got this exemption but it’s clear that Trump is tying tariffs to the NAFTA negotiations and if there is no NAFTA deal on their terms there will be no exemptions from tariffs.”
Trump held a news conference to announce the tariffs for the rest of
the world will go into effect in 15 days.
“Due to the unique nature of our relationship with Canada and Mexico ... we’re going to hold off the tariff on those two countries to see whether or not we’re able to make the deal on NAFTA,” he said.
Warrian says landing a new agreement will not be an easy matter, especially under a tough time line of four to six weeks imposed by the Americans. Another major irritant, is that the U.S. side wants a buy-American steel only rule for government procurement in the U.S. but an open free trade system when it comes to government purchases in Canada and Mexico.
McMaster University business professor Marvin Ryder says Trump “is as unpredictable as the weather. Today he has linked steel and aluminum to national security. Nothing will stop that man from waking up tomorrow and linking that to something else all together.
“I don’t know if any of us are safe frankly as long as he is president of the United States. He has an approach that I have never seen before in my life.”
Meanwhile, Prime Minister Justin Trudeau is planning to visit Hamilton on Tuesday, as part of a larger Canadian tour to show support for Canadian steelmakers.
Trudeau is expected to visit steel mills at both Stelco and ArcelorMittal Dofasco and take part in a round-table meeting with stakeholders in Hamilton’s steel industry. He is also heading to Algoma in Sault Ste. Marie, the other major steelmaker in Ontario.
Hamilton makes about 40 per cent of the country’s steel, and both the city’s major steelmakers have a huge stake in the negotiations with the U.S. For one thing, AM-Dofasco is part of a vast transborder automotive steel supply chain that could be severely disrupted if the NAFTA talks fail to produce a new agreement.
In Stelco’s case, it has been trying to win back automotive contracts it lost under previous owner U.S. Steel Canada. Analysts say that quest has likely been made more difficult with uncertainties over tariffs and NAFTA.
Neither steelmaker in Hamilton could be reached for comment.
Hamilton East-Stoney Creek MP Bob Bratina said he expected Trump would backpeddle on tariffs against Canada. “I’m very happy but this is the way that I expected it would go . ... I think Canadian steel is in a good position.”
Joseph Galimberti, president of the Canadian Steel Producers Association, said with tariffs against Canada gone there is still a concern about overseas steelmakers — who do face the tariff — diverting shipments to Canada.
“I think we need to continue to be vigilant about potential diversion of offshore steel to Canada and what that means for the domestic market.”