Doubled tariffs raise concerns Canadian steel could be shut out of U.S., but some companies say they'll adjust
With U.S. President Donald Trump's tariffs on steel and aluminum now doubled, Canadian steel businesses and industry leaders — already wounded by the initial tax — haved mixed reactions about the hike.
Calling the impact of the initial 25 per cent tariffs "devastating," after it resulted in job losses and a drop in shipments to the U.S., one steel industry leader says a 50 per cent tariff will lead to a "dramatic acceleration" of those trends.
"At a 50 per cent tariff, we basically consider the U.S. market closed — completely closed, door slammed shut, if you will — to Canadian steel," said Catherine Cobden, CEO of the Canadian Steel Producers Association.
"We can't ship at 50 per cent. Perhaps we can stockpile for a few days, but obviously we can't keep producing if one of our major markets is shuttered."
Trevor Borland, the president and owner of Pacific Bolt Manufacturing in Langley, B.C., says his company imports raw steel from U.S. states like California and Ohio to manufacture its fastener products.
With the cost of that material subject to Trump's tariffs, and the raw steel industry largely concentrated in central Canada, the company has pivoted to buying steel from Quebec mills. But trucking heavy materials across the country makes Pacific Bolt's operation all the more expensive.
"The challenge is, from a cost point of view, how do we stay competitive with that extra cost in transportation?" Borland said. The U.S. used to make up five to 10 per cent of its overall sales, but Trump's tariffs have "vaporized" that income.
The company had nailed down a plan to manage the original 25 per cent tariffs, but Borland worries that the hike to 50 per cent — announced on Friday and imposed on Wednesday just after midnight — could paralyze his suppliers and customers.
"Most companies just don't have that type of cash laying around, to pay these type of tariffs," he said. With the bar changing so frequently, "it makes it almost impossible to do any type of strategic planning when you have no idea what the future is gonna bring you."
Other companies say they have the wiggle room to withstand the double tariffs.
Parag Shah, the president of steel cabinetry manufacturer NewAge Products, observed that sales have plateaued as some customers hold off on big purchases. "We're trying to eat as much of the cost as possible," he said.
But the tariffs are now part of the company's cost structure in the same way that logistics, packaging and shipping are, he told CBC News.
The Toronto-based company produces some of its goods overseas and then ships them to the U.S. and other markets. They pay a tariff on the steel components in those products when they enter the U.S.
"It's a big jump, but at the same time, we're a very agile company in terms of the way we produce our goods and source our goods," he said, adding that the company has been "constantly adjusting" over the last several years.
"I think the biggest challenge for a business is it's happening so quickly. Usually there's more notice," he said. "But it is what it is. You just gotta roll with the punches."
'Steel dumping' remains a concernYet the doubled tariffs have the steel industry sounding the alarm on another long-festering issue.
Industry leaders have alleged for years that foreign steelmakers are selling steel into the Canadian market at ultra-low prices, a practice commonly known as "steel dumping."
Michael Garcia, CEO of steelmaker Algoma Steel, said in an interview with the Globe and Mail this week that existing tariffs had already done considerable damage to the company's revenue, and that a double tariff would make its U.S. business "commercially unviable."
Yet he suggested that existing U.S. tariffs are only half the battle, with steel dumping worsening the already challenging market conditions in Canada. Garcia said the company is losing more money here than it is in the U.S. as a result of the practice.
A representative for Algoma Steel declined to comment when reached by CBC News.
Barry Zekelman, the CEO of Canadian steel tubing manufacturer Zekelman Industries, has long warned about steel dumping into Canada.
He reiterated those concerns last week during an online forum with Steel Market Update, accusing China, of rerouting cheap steel into the Canadian market through Vietnam, Thailand and South Korea. China is now subject to a 25 per cent steel tariff from Canada.
The Canadian International Trade Tribunal is responsible for investigating complaints related to the practice, and is currently reviewing a number of active cases. It works in conjunction with the Canada Border Services Agency, which issues anti-dumping duties.
Last month, the CBSA launched its own investigation into several countries, including China, to determine whether the anti-competitive practice is being carried out in Canada. CITT will handle the preliminary inquiry, with a decision to be released in July, and CBSA expects to issue its own decision in August.
Cobden, the Steel Producers Association chief executive, says border tariffs on "unfair traders" engaged in steel dumping should be the first order of business when it comes to addressing the issues plaguing Canada's domestic industry.
She says the industry is asking the federal government to both match the U.S.'s 50 per cent steel tariffs, and to impose tariffs that will "prevent diversion of steel into our country."
cbc.ca
