Feds seek to stem flood of cheap steel

Aim to keep Canadian producers, U.S. happy

OTTAWA — The federal government extended an olive branch of sorts to Donald Trump’s tough-on-trade White House on Tuesday as it began exploring how best to address industry concerns that U.S. tariffs are turning a trickle of foreign steel imports into a torrent.

Over the next 15 days, Ottawa will seek input from producers, users and the public as it considers imposing “safeguards” on the import of several steel products, said Finance Minister Bill Morneau. The measures, if applied, could include quotas, surtaxes or a combination of both.

If the consultation period identifies a risk of potential damage to the Canadian industry, then Ottawa will impose safeguards in an “expeditious manner,” Morneau said in Hamilton.

The main goal is protect Canada’s steel industry, the government insists — but taking a stand against cheap steel imports will also appease the White House, which has complained that Canada has allowed for an invasion of bargain-basement steel into the U.S. from places like China.

U.S. Commerce Secretary Wilbur Ross said the steel and aluminum tariffs Washington imposed on Canada and other allies were designed to force them to address the overproduction of steel around the world.

The Trump administration has also drawn direct links between steel imports, tariffs and the ongoing efforts to renegotiate the North American Free Trade Agreement.

With the crucial U.S.-Canada trading relationship at a low point, it’s in Ottawa’s interest to show Trump that Canada is taking action on the diversion and dumping of steel.

Foreign Affairs Minister Chrystia Freeland has insisted that Canada introduced stronger safeguards on steel well before the U.S. imposed the tariffs in June. At the same time, however, Ottawa acknowledged more work was necessary and promised to consult with industry on safeguards.

In unveiling his plan Tuesday, Morneau said worries about cheap, foreign steel finding its way into Canada have grown since the application of the U.S. duties on steel imports against numerous countries.

The levies have put producers in other parts of the world on a quest to find new markets, such as Canada, he said.

“We’ve seen increases in imports,” Morneau said, although he did not offer specifics. “That surge in imports leads us to be concerned that we need to consider what measures to take.”

International trade rules enable a country to introduce safeguards to protect its domestic market when it finds itself in an unusual situation, said Morneau, arguing that the expected fallout from the U.S. tariffs qualifies as an “exceptional circumstance.”

The consultations will focus on products that could see safeguard action: steel plates, concrete reinforcing bars, energy tubular products, hot-rolled sheets, prepainted steels, stainless steel wire and wire rods.

Joe Galimberti, the president of the Canadian Steel Producers Association, welcomed the consultations, noting that industry has been seeing increased import activity from offshore sources.

“This is a serious, serious challenge for the industry and a flood would truly be devastating to a lot of our producers,” he said.

But some industries in Canada that use steel are urging Ottawa not to proceed with safeguards. The Canadian Coalition for Construction Steel, which represents construction steel suppliers, fabricators, service centres, and importers, warns that safeguards would put more than 60,000 construction jobs in the country at risk.

“The government needs to be really cautious about this,” said Jesse Goldman, a lawyer representing the coalition.

The retaliatory steel tariffs introduced by Canada against the U.S. already provide a lot of protection for the steel industry, Goldman said. Imposing safeguards on the rest of the world would likely cause a supply shortage of steel in Canada, he added.