The Canadian government says it will apply quotas and a 25 per cent tariff on steel imports from China and other countries to avoid becoming a dumping ground for steel in the face of metal levies imposed by U.S. President Donald Trump.
The new barriers are intended to avert any flood of shipments of seven types of foreign steel, while the government will issue refunds and exemptions to some Canadian firms on tariffs paid on imports from the US.
“We have discussed safeguards with the government for a very long time, and feel like there is significant evidence” in favour of it, said Joseph Galimberti, president of the Canadian Steel Producers Association (CPSA). “The safeguard is a warranted and badly needed action.”
The US imposed tarrifs of 25 per cent on steel and 10 per cent on aluminum on purported national security grounds and while the US and Canada have agreed to a revised trade agreement replacing the existing North America Free Trade Agreement, the US steel tariffs remain in place.
“We continue to discuss the section 232 tariffs with our U.S. counterparts. Our position remains clear and firm: these tariffs are entirely unjustified,” Adam Austen, a spokesman for Canadian Foreign Minister Chrystia Freeland, said in an email to Bloomberg News. “The best economic outcome for both countries would be for the U.S. to remove these tariffs.”
The new safeguard measures announced on Oct. 11 affect heavy plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire, and wire rod.
Tariffs of 25 per cent will apply above an average of recent import volumes — in effect, a quota with tariffs applied above that level. The provisional tariffs take effect on Oct. 25. The Canadian International Trade Tribunal will hold an inquiry on whether to eventually finalize those.
The new quotas and tariffs will affect countries such as China and Turkey, but not Canadian steel imports from the U.S., which are already subject to other duties. Mexico is partially exempted, while Chile, Israel and some developing countries are exempt, the Bloomberg report said.
There are some refund and rebate provisions.
“The Government recognizes that Canadian countermeasures against U.S. imports can create challenges for Canadian manufacturers that rely on steel and aluminum imported from the U.S.,” the finance department said in a written statement. “A portion of this relief will be temporary, offered until such time that Canadian producers are able to adequately meet domestic demand.” Applications for refunds or exemptions will be handed on a case-by-case basis, and the Canadian counter-tariffs still apply, the government said.
“Canada’s steel industry is currently facing increasing pressure from significant disruptions in global steel markets caused by global overcapacity, recent U.S. trade actions and Safeguards initiated by additional consequential jurisdictions like the European Union,” said CSPA president Joseph Galimberti. “Today’s announcement of a Canadian Safeguard action is warranted and essential to stabilizing our domestic steel market and ensuring Canadian companies and employees can continue to compete fairly in our home market.”
A safeguard action is a World Trade Organization (WTO) compliant tool available to governments for the purpose of stabilizing domestic markets in the face of extraordinary threat. The CSPA supports the evidence-based safeguard action initiated by the Government of Canada to ensure that Canadian businesses are not further harmed by dramatic increases in offshore steel imports while sufficient steel supply remains available to support vital industrial, building, energy and manufacturing applications in Canada.
“The CSPA welcomes the Government of Canada’s action today to address global steel diversion into the Canadian market. We will continue to work closely with the Government to preserve free and fair trade of steel in Canada,” Galimberti said. “While the CSPA and our members remain committed to returning to the free and fair trade in North American steel which has supported Canadian industrial supply chains for a generation, today’s announcement is a critical step in defending Canadian workers and businesses from unwarranted harms being suffered as a result of these exceptional global circumstances.”