The federal Department of Finance says it will limit the amount of foreign steel coming into the country by placing a tariff on imports that exceed a certain threshold from countries that do not have a free trade agreement with Canada.
The policy, known as a “tariff rate quota,” announced on Friday allows non-free trade countries to send the same volume of steel to Canada that they sent in recent years, but applies a 50 per cent tariff if they exceed a designated threshold in any single quarter.
The United States in June raised tariffs on foreign steel from 25 per cent to 50 per cent. The result has effectively closed the U.S. as a long-term market to many of Canada’s largest steel producers, as well as those in other countries.
Now, steel companies say they are trying to grow their domestic sales at the same time as steel producers around the globe eye the Canadian market as a way to offset lost sales in the U.S. As a result, lobbyists have been pressing the Liberal government to protect the industry.
“The industry had asked repeatedly for significantly lower import levels on unfair traders to regain market share at home,” Catherine Cobden, chief executive of the Canadian Steel Producers Association (CSPA), which represents the 17 largest domestic steel companies, said in a release on Thursday. “We believe it is long overdue.”
But the CSPA has been clear that its members would like the federal government to enact policies that go further. Earlier this month, its board members travelled to Ottawa for a meeting with some key ministers.
Michael Garcia, chief executive of Sault Ste. Marie, Ont.-based Algoma Steel Group Inc., said he asked the government for a tariff rate quota that would apply a 20 per cent tariff on steel from all countries, including those that have free trade agreements with Canada.
“That would be something that would have a meaningful impact on the health of the Canadian steel sector,” he said.
Historically, Algoma has said it sells 50 per cent to 60 per cent of its products, measured by volume, into the U.S. Now, that level has fallen below 50 per cent and is still shrinking as the fallout from the U.S.’s 50 per cent tariffs continues.
Canada imported 8.3 million tonnes of steel in 2024, a 5.5 per cent decline from 2023, according to the U.S. International Trade Monitor. Canada also exported about 6.4 million tonnes of steel, mainly to the U.S., where it is the largest source of foreign steel.
A spokesperson for the Finance Ministry said that non-free trade agreement countries sent 2.6 million tonnes to Canada in 2024.
“This measure will help stabilize the Canadian market and prevent harmful diversion of foreign steel from third countries into Canada while minimizing impacts on Canadian importers and downstream users,” the Department of Finance said in announcing the measures.
The new tariff rate quota will be apply to five categories of steel products: flat, long, pipe and tube, semi-finished and stainless steel. It would be additive to any existing surtaxes. At a rate of 50 per cent, it would be equal to the rate that is being applied to steel imports by the U.S.
Prime Minister Mark Carney in June announced a series of measures designed to address the impacts of U.S. tariffs on domestic steel mills, with the tariff rate quota being just one policy. Carney also signalled a forthcoming tariff based on the country of “melt and pour” for steel. He also committed to using more domestically produced steel in public works projects.
But curbing steel imports could have impacts that reverberate throughout the economy. Many of the country’s smaller steel companies, which do not melt their own steel but instead rely on imported steel, say their products are thoroughly integrated into the Canadian economy: They cut or fabricate imported steel into rebar and other products that are used in housing and infrastructure and by various industries.
Those companies have argued that the domestic steel mills cannot always accommodate their orders, forcing them to rely on imports. But several insiders said they were reluctant to speak publicly because they still rely on domestic mills and fear that speaking out against policies that limit imports could harm their business.
Carney has created an industry-government steel task force to review the impact of the new tariff rate quotas in 30 days.
Whatever the impact of the new policies have on steel imports, the U.S. tariffs have created what Cobden called a “dire” situation for domestic steel mills, which melt their own steel. There have been an estimated 1,000 layoffs in the Canadian sector.
Garcia said everyone in the steel sector is hopeful that Carney will strike a trade deal with the U.S. by July 21, as was suggested during the G7 meeting that took place in Alberta in June.
“That’s why everybody in the steel industry is watching that date closely,” he said. “If that date passes, and there’s no confidence that the 50 per cent tariff is going to be moved down in any significant way, that’s going to have ramifications for the steel industry in a very significant way.”
• Email: gfriedman@postmedia.com
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