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Canada's Steel Industry Braces for Severe Damage as Carney Tempers Expectations

Strategic Insights

— 2 min read

Prime Minister Mark Carney has dampened hopes for a tariff-free economy, prompting Canada's steel industry to sound the alarm over potential severe damage. Carney's comments come as the auto, agricultural, and energy sectors push for no trade levies at all. The steel industry is bracing for a worse-than-expected plunge in production, with Canadian steel production already plummeting by 30 percent in May. The industry is now warning of catastrophic losses if no deal is reached to mitigate the impact of 50-per-cent tariffs on Canadian steel and aluminum.

Key Takeaways:

  • The Canadian steel industry is warning of severe damage if no deal is reached to mitigate the impact of 50-per-cent tariffs on Canadian steel and aluminum.
  • Prime Minister Mark Carney has stated that he doesn't believe an agreement can be reached with U.S. President Donald Trump that removes all tariffs on Canada.
  • Canadian steel production plummeted by 30 percent in May, and the industry is bracing for a worse-than-expected plunge in production.
  • Catherine Cobden, CEO of the Canadian Steel Producers Association, stated that the doubling of the levy effectively shut Canadian mills out of the U.S. market, with order books in "very bad shape" as of July.
  • Algoma Steel Group Inc. CEO Michael Garcia emphasized the need for near-term certainty on tariffs, saying that any deal would provide relief from the current uncertainty.
  • The Canadian auto industry has consistently said trade with the U.S. has to be tariff-free, with David Adams, CEO of Global Automakers of Canada, stating that no tariffs are acceptable.
  • The Canadian agricultural sector is also opposed to broad-based tariffs, with Michael Harvey, executive director of the Canadian Agri-Food Trade Alliance, emphasizing the importance of not sacrificing the country's agricultural exports.
  • The U.S.-imposed 10-per-cent tariff on Canadian oil and gas exports will have a significant impact on Alberta's energy sector, with an estimated 98 percent of the province's oil and gas exports being compliant under the trade agreement.

Statistics:

  • Canadian steel production plummeted by 30 percent in May.
  • Half of Canadian steel producers' output was previously sent to the United States.
  • The 50-per-cent tariff on Canadian steel and aluminum effectively shut Canadian mills out of the U.S. market.
  • Algoma Steel Group Inc. is currently facing significant uncertainty due to the lack of certainty on tariffs.
  • 98 percent of Alberta's oil and gas exports are compliant under the USMCA trade agreement.

Sources:

  • "Canada's Mark Carney says Trump deal unlikely", Globe and Mail, July 2023.
  • "Canadian steel industry warns of severe damage if no deal reached on tariffs", Globe and Mail, July 2023.
  • "Canadian auto industry pushes for tariff-free trade with U.S.", Globe and Mail, July 2023.
  • "Alberta's energy sector to be impacted by U.S.-imposed tariff on oil and gas exports", Globe and Mail, July 2023.

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