Canada’s steel and aluminum industries have warned they face an “existential threat” if the Trudeau government fails to join the United States and Mexico in imposing tariffs on Chinese imports this month.
“Canada cannot be the only CUSMA member state that has not taken this serious step. There are many reasons, including the fact that without checks and balances at the border, Canada would become a dumping ground for excess steel capacity,” said Catherine Cobden, president and CEO of the Canadian Association of Steel Producers, referring to the Canada-U.S.-Mexico trade agreement.
“Frankly, in our view, doing nothing is not an option.”
The two industries are calling on the federal government to impose tariffs of at least 25 per cent on all Chinese-made molten and cast steel products and most aluminum products imported into Canada.
This coincides with new tariffs announced by the US on 289 steel and aluminium imports from China.
“What concerns me is the urgency,” Cobden said. “I can’t emphasize enough how important it is at this time that we align with our largest trading partner, the United States, and, frankly, our CUSMA partner, Mexico.”
“Failure to act risks losing good jobs in the steel and aluminum industries across this country, which will translate into lost economic growth and investment for Canada.”
“Hole in the CUSMA Fortress”
In May, the United States announced it would impose tariffs of up to 24% on 387 Chinese products, including steel and aluminum.
“Our metal is like water, it will seek the path of least resistance to get the highest price,” said Jean Simard, president of the Canadian Aluminum Association. “With Mexico and the U.S. locking out Chinese excess capacity, we now have the only tariff-free entry point into the CUSMA trading space.”
According to the Canadian Steel Producers Association (CSPA), more than 760,000 tonnes of Chinese-made molten and cast steel will enter the U.S. market in 2023, up from more than 750,000 tonnes the year before.
This amount is 20 per cent more than the amount of Chinese steel currently imported into Canada each year.
“This is a clear and present danger,” Simard said. “We cannot and will not allow this to happen. This is not in the interest of our industry or in the interest of Canada.”
Simard and Cobden said any Chinese steel diverted from the U.S. market by the tariffs could find its way into the United States.
“In an ideal world, [the government] “We will work in lockstep with the U.S. government’s implementation to poke holes in the CUSMA fortress to stop Chinese imports from flowing in,” Simard said.
Simard also pointed out the environmental impact of Chinese steel and aluminum.
“Canada’s aluminum industry competes with the best and the best,” he said, “producing the world’s lowest carbon-intensive aluminum and creating good-paying jobs.”
“Chinese metals are seven times more carbon intensive than Canadian metals, so allowing Canadians to import metals from China means importing carbon at no cost, shipping jobs overseas at a high cost, and undermining hard-earned investments in technology.”
‘Devastating impact’
In May, the office of the deputy prime minister said Canada would not become a “dumping site” for Chinese steel and aluminum and the government was not ruling out any options.
However, no new measures have been taken since then.
Deputy Prime Minister Chrystia Freeland’s office told CBC the country just finished a consultation process that considered tariffs on Chinese electric vehicles, but is not considering tariffs on steel or aluminum.
“All options are on the table to protect Canadian workers and the EV supply chain from unfair competition resulting from China’s deliberate state-sponsored overcapacity policy and lack of rigorous labour and environmental standards,” said Katherine Kupplinskas, a spokeswoman for Freeland’s office.
“A consultation process has just concluded on electric vehicles and the whole value chain, including aluminium and steel,” Simard said. “Probably more than 200 representative organisations have given their input. We are waiting for the government to give the right signals from this consultation.”
CSPA says the consultations show the government recognizes that China’s excess industrial capacity is having a “devastating” impact on Canadian jobs and competitiveness.
“We want to make sure they’re on the starting line and don’t wait until the finish line, because otherwise it’s too late,” Simard said. “They have to be there at the same time as their partner.”
Industry leaders said emergency measures must be taken immediately.
“We’ve seen the amount of Chinese steel in our market double in recent years,” Cobden said. “This is evidence that trade remedies alone are not enough to address the current situation of Chinese overcapacity.”
The Treasury Department’s website says Canada’s trade remedies program “provides remedies for Canadian producers who are injured by unfairly traded goods entering the Canadian market,” but Cobden said 56% of trade claims currently being pursued through the program are already against China, in whole or in part.
Cobden said the system is cumbersome and could take more than a year to reach a conclusion.
“The issue is the decline of the Canadian steel industry and jobs, and we’ve seen a systematic decline in the amount of steel we can sell domestically,” she said.
