Canada Tightens Quotas and Announces Tariffs to Protect Steel Industry

Strategic Insights -

Prime Minister Mark Carney has announced measures to protect Canada's steel industry from the impact of foreign steel flooding into the country due to President Donald Trump's tariffs. The government is tightening quotas on steel imports from countries with no free-trade agreements with Canada, and imposing 50-per-cent tariffs on imports from countries with free-trade agreements, other than the United States. This move comes after the steel industry said the previous measures did not go far enough to protect Canadian steel mills.

Key Takeaways:

  • The federal government is tightening quotas on steel imports from countries with no free-trade agreements with Canada to 50 per cent of 2024 levels.
  • Countries with free-trade agreements with Canada, other than the United States, will face 50-per-cent tariffs if they ship more than 100 per cent of their 2024 volumes into Canada.
  • The government is investing $70-million for training and income support to 10,000 steelworkers affected by the tariffs.
  • $1-billion is being committed to help steelmakers advance projects aimed at making them more competitive at home.
  • The steel industry has lost access to the U.S. market, with about one-third of the steel purchased in Canada going to domestic mills.
  • The use of dumped foreign steel is making domestic mills uncompetitive, with about one-third of the steel purchased in Canada going to domestic mills.
  • The Canadian Institute of Steel Construction has called for a trade pact with the U.S. that gives certainty to companies caught in the crossfire.

Statistics:

  • The steel industry ships about half of its output, representing 90 per cent of its exports, to the U.S.
  • The tariffs imposed by Mr. Trump have resulted in foreign steel producers selling metal into Canada at artificially low levels, also known as dumping.
  • Rio Tinto PLC incurred US$300-million in costs stemming from the U.S. tariffs on its Canadian aluminum exports in the first half of the year.
  • Alcoa Corp. said the U.S. tariffs on Canada cost it US$115-million.
  • The steel industry has lost access to the U.S. market due to the 25-per-cent tariffs imposed by Mr. Trump in March, and the subsequent 50-per-cent tariff.

Sources:

  • The Globe and Mail, Laura Stone, "Canada tightens quotas, announces more tariffs after steelmakers ask for protection from cheap metal flooding into country."
  • The Globe and Mail, "Federal government to invest $70-million for training and income support for steelworkers affected by tariffs."