Man of steel comes to Liberals’ rescue
U.S. pressured to remove tariffs from resource
Justin Trudeau welcomed the removal of U. S. tariffs on Canadian steel and aluminum with an almost manic exultation — hugging just about anyone who came within arm’s reach.
“This is pure good news for Canadians and for families as we head into a long weekend,” he said.
Most of all perhaps, it is pure good news for a prime minister who, if he fell into a bucket of candy, would emerge sucking his thumb, such has been his misfortune in recent months.
We don’t yet know the precise terms of the deal, but it appears to be a good one for Canada. The White House was demanding a cap on Canadian exports at little more than 2017 levels — a proposal rejected out of hand by the Liberals.
Trudeau said his government had “stayed strong” in the face of American demands for quotas and restrictions. Instead, the two countries accepted an arrangement where they will monitor aluminum and steel trade between them. If there is a surge in an individual product, the importing country can reimpose tariffs on that product.
The idea is to create a Fortress North America to protect against foreign, particularly Chinese, steel entering Canada and being diverted to the U.S.
It is something of a chimera; trade experts like veteran Toronto lawyer James Mcilroy say there is very little low- cost Chinese steel entering Canada, thanks to anti-dumping duties.
“The idea is that there are all kinds of Chinese goods coming into Canada and then being diverted. I haven’t seen evidence of that,” he said.
Then there are trade statistics that show Chinese steel exports to the U.S. were up last year, as American businesses sought exclusions from tariffs to ensure a supply of cheap steel.
For a trade war that was launched to combat Chinese over- supply, it has been an abject failure.
But from Donald Trump’s point of view, perhaps the point has already been made. By sowing the seeds of uncertainty, he may have persuaded business leaders that future investment should be located inside U. S. tariff walls that, even if they have been lowered for now, can easily be raised again. Mexican steelmaker Tenaris has plants in its homeland and in Canada. Yet its North American headquarters is in Houston, from which it supplies the U. S. market.
Trudeau was quick to claim victory for the elimination of the duties.
The government should be commended for imposing dollar- for- dollar retaliatory tariffs last summer.
But the decisive intervention was likely that of U. S. Senator Chuck Grassley, the chair of the Senate finance committee, who said that Congress would not approve Trump’s new NAFTA deal unless the tariffs were lifted. The Iowa senator was concerned the retaliatory tariffs by Canada and Mexico were hurting agricultural products in his home state.
Canada had also made clear that ratification was dependent on the tariffs being removed.
The timing is perfect for Trudeau — and perhaps for Canada’s steel producers. The three largest producers — Arcelormittal Dofasco, Algoma and Stelco — were paying the U. S. tariffs to ensure they kept their American customers. But one industry source estimated the cost at $ 60-70 million a month — figures that were clearly not sustainable.
Times have been pretty good in the steel industry in recent years; prices hit an all time high last September and companies like Stelco were able to afford a special $100-million cash dividend.
That was even before the Liberal government stumped up a $ 2- billion package to defend the industry against the tariffs.
But they were beginning to bite. The Canadian mills need open access to the U. S. market to sell their excess capacity. Steel prices have been dropping to the point where selling into the U. S. with a 25 per cent tariff was unprofitable.
The Liberals feared that might mean production cuts, job losses and even plant closures just months before a general election.
The end of hostilities should preclude that prospect.
The great patriotic war in defence of the steel industry has been won and 23,000 Canadian steelworkers can breathe more easily.
No wonder Trudeau looked like a kid in a candy store.