Alberta calls U.S. tariffs on steel ‘insulting, absurd’

Notley backs federal retaliation as ‘incentive’ to end Trump strategy

As a trade battle erupts between Canada and the United States over steel and aluminum, Alberta’s NDP government is lashing the Trump administration’s “absurd” and “insulting ” tariffs and offering its support to Ottawa as it faces down the U.S president.

Donald Trump followed through on a longstanding threat Thursday, as Commerce Secretary Wilbur Ross announced the U.S. would end the temporary exemption on Canadian, Mexican and European Union steel and aluminum and impose import duties of 25 per cent and 10 per cent, respectively, at midnight June 1.

Prime Minister Justin Trudeau and Foreign Affairs Minister Chrystia Freeland announced in turn that Canada would retaliate “dollar-for-dollar” as of July 1 with $16.6 billion in tariffs on U.S. steel, aluminum and a host of other products ranging from yogurt to felt-tipped pens.

In Fort McMurray to talk about pipelines, Notley said the Americans’ “unpredictable behaviour” showed the need to diversify markets for Alberta’s energy resources and end the oilpatch’s overwhelming reliance on the U.S. as a customer.

The premier also offered support for Trudeau’s countermeasures.

“If it gets to that point, it is important for us to make the point about how integrated our economies are and to ensure there is an incentive for folks on the other side of the border to pressure their government to move away from this strategy,” Notley told reporters.

“We’ll be working with the federal government to come up with the best strategy to underline the amount of economic disruption which occurs on both sides of the border when our economic relationships are jeopardized like this.”

Notley said Alberta would also seek exemptions from the tariffs for certain projects but gave no further detail. The NDP government said later that the premier was referring to previous calls from the Pacific NorthWest Economic Region for a permanent exemption for Canada from American tariffs on steel and aluminum.

At the legislature, Deron Bilous, minister of economic development and trade, had harsher words, slamming Trump’s decision to impose the duties under national security provisions as “absurd” and “insulting.”

He said Alberta fully supports Ottawa’s actions, with the 30-day window before Canada’s retaliatory measures kick in allowing for complaints to be filed with the World Trade Organization.

“It gives the U.S., as well, an opportunity to walk this back,” Bilous told reporters.

The government held a conference call Thursday afternoon with Alberta businesses that are major steel consumers, including construction companies and oilpatch players such as Encana and Suncor.

The Canadian Association of Petroleum Producers called the American actions a “troubling development.”

“Steel is important in every part of the oil and gas industry, from drilling, production, processing, storage and transportation utilizing pipelines,” Nick Schultz, CAPP’s vice-president, pipeline regulation and general counsel, said in a statement.

“These imposed tariffs on steel imports will add a significant cost burden to the industry on both sides of the border as Canada intends to impose surtaxes or similar trade-restrictive countermeasures against the United States as a response.”

Alberta’s steel and aluminum production is relatively small, with exports of $500 million worth of steel going to the U.S. each year, but the new tariffs will have immediate consequences on the local industry.

“We’re shipping steel to California for some work and I imagine that’s going to stop completely,” said Robin Furlong, who runs Furlong Steel of Calgary.

“It wouldn’t make financial sense for California to buy off me because I would be shipping steel down to the States. Shipping steel down to the States will be taxed more. So that’s probably not going to happen anymore.”

International trade expert Hugh Stephens, an executive fellow at the University of Calgary’s School of Public Policy, said the impact will be felt by anyone who exports steel.

“A 25 per cent tariff on products, if it comes immediately, all these things disrupt business, clearly,” he said. “It’s going to make Alberta exports, or Canadian exports in these particular areas, more expensive. In theory it’s supposed to defend the U.S. production base, but are they going to find alternate suppliers in the U.S.? Maybe, but that will take time. It won’t happen immediately.

“Depending on the product, they may have no option but to swallow and pay the tariff and pass that on to their customers. At the end of the day, it’s bad for exporters and it’s bad for U.S. consumers.”

Furlong said retaliatory tariffs on the American steel industry by Canada could help offset the loss of U.S. business.

“I have a competitor that’s in Chicago that beats the hell out of my pricing all the time because Alberta labour’s pretty expensive,” he said. “So if there’s a tax of buying over the border, (Canadians) would have to buy local because it wouldn’t be competitive anymore.”

Carlo Dade, trade expert with the Canada West Foundation, said while the “insane” U.S. measures will hit Alberta now, the bigger concern is what it means for trade relations in the long run.

Trump has not only repeatedly threatened to pull the U.S. out of NAFTA, there are major questions over how he would respond to a likely American loss at the World Trade Organization, Dade said.

“It is absolutely frightening,” he said. “If they lose at the WTO, do they then go after the World Trade Organization?”