Local steelmakers find tariffs are making U.S. orders tough
The Trump Administration’s 25 per cent tariff on steel is playing havoc with local steelmakers trying to sell products in the United States, but the city’s major players, ArcelorMittal Dofasco and Stelco, have not announced any layoffs because of it.
That contrasts with Tenaris in Sault Ste. Marie, which issued a statement earlier this month saying it was chopping more than 40 jobs because the tariffs have created an “unsustainable” market.
Quebec-based steelmaker ADF Group more recently announced 50 layoffs because of the escalating trade dispute.
Steelmakers declined requests for interviews. But on June 26, the Commons Standing Committee on International Trade heard Sean Donnelly, president and chief executive officer of ArcelorMittal Dofasco, as well as Stephen Young, senior commercial sales and marketing manager of Stoney Creek-based Janco Steel Ltd., say the tariffs have caused enormous problems.
“Most U.S. customers are currently unwilling to place orders or to engage in any long-term business commitments due to the tariff,” said Young of Janco, which has 180 employees. “Our American customers are now sourcing new supply from their local market to secure greater cost certainty,” he said.
A spokesperson for Janco could not be reached to elaborate on the presentation.
The steel tariff, along with a 10 per cent tariff on aluminum, went into effect June 1. Then on July 1, Canadian countermeasures, which included tariffs on steel, aluminum and numerous other products, kicked in.
Asked by The Spectator about the effect of the tariff on its business, ArcelorMittal Dofasco issued a statement: “Given steel trade between the U.S. and Canada is in balance, we believe the goal must be to permanently eliminate tariffs between Canada and the U.S. and that companies in both jurisdictions must be able to operate in an undistorted competitive market.”
According to a transcript from the committee , Donnelly said: “Left unmitigated for a prolonged period of time,” the combined impact of the tariffs and diverted offshore imports of steel, “could result in reduced production, potential shutdown of operating lines, impacting over 1,000 direct jobs and over 4,000 indirect jobs in Ontario and Quebec with significant implications for the ROI (return on investment) on current projects and impairment of future facilities investments.”
A Dofasco spokesperson said Donnelly was referring to the company’s operations in Canada, of which there are 15 employing 8,000 people. ArcelorMittal Dofasco, in Hamilton, is one of those divisions and employs 5,000. It is not clear the extent to which the possible layoffs would take place in Hamilton, if they take place at all.
Donnelly said ArcelorMittal Dofasco — along with some of ArcelorMittal’s other Canadian operations — ships more than 1.7 million metric tons of steel per year to the U.S. for use in the automotive, construction, general manufacturing, energy, and consumer packaging sectors. That’s 30 per cent of its total production.
He said before the tariff, “ArcelorMittal Dofasco was one of the most financially successful operations in North America. That is no longer the case” and noted the company was reconsidering $750 million in future investments.
Peter Warrian, of the University of Toronto Munk School of Global Affairs, said, “Clearly they are hung up about those investment decisions going forward.”
McMaster business professor Marvin Ryder says he believes a reason Trump imposed the tariff was to undermine the Canadian industry by making the future uncertain and discouraging investment. “He’s making everyone rethink their investments for 2019, 2020, 2021.”
Gary Howe, president of United Steelworkers Local 1005, said Stelco doesn’t have that much American business that’s affected by the tariff. Previous owner, U.S. Steel Canada, moved a lot of the company’s business to its operations in the U.S. So when current owner Bedrock Industries took over last year, there wasn’t much American business left.
However, analysts note, recovering that American business is a big part of the company’s strategy.