Since its implementation in early 2018, the impacts of these tariffs, in addition to Canadian countermeasures and world safeguards, have had significant negative effects on the Canadian steel construction industry. The downstream steel construction sectors are facing an increase in contractual risk and uncertainty. Canadian steel fabricators are at a global competitive disadvantage with these tariffs in effect, putting their ability to secure contracts on large infrastructure or industrial construction projects at risk. For the sake of Canadian companies and their employees, it is imperative that the Canadian government negotiates an immediate resolution for steel tariffs.
In February 2018, the U.S. Department of Commerce released a report that provided recommendations to U.S. President Donald Trump that indicated claims of a national security crisis. As a result, President Trump exercised Section 232 of the Trade Expansion Act of 1962, declaring a 25% tariff on all raw steel imports going into the U.S effective as of March 2018. This action promptly impacted a number of countries globally, with the exception of Canada and Mexico due to the pending NAFTA negotiations at the time.
On the morning of May 31, 2018, with no indication of NAFTA negotiations concluding, the U.S. administration declared the immediate expiration of Canada and Mexico’s exemption, including them in the U.S. imposed steel tariffs along with the rest of the world.
The Canadian government has since retaliated with countermeasure actions in an effort to defend its trade interest and workers.
In July 2018, Canada imposed dollar-for-dollar retaliatory tariffs against the U.S., amounting to $16 billion worth of products. This action was taken in direct response to the 25 per cent steel tariff the U.S. administration had implemented earlier that year.
The steel products included in Canada’s countermeasures include:
- Low alloy flat rolled plate and col, bars and rods (all standard grades affected)
- Low alloy channels, angles, I, T and beams less than 80mm (all standard grades affected)
- All alloy flat rolled plate and coils, bars, rods, shapes and sections—with the biggest impact on weather steels
- HSS and pipe sections (all sizes)
- Cast iron and steel (connections)
The federal government has expressed their support of the Canadian steel industry by providing a plan of action for those affected by the Canadian tariffs. Financial assistance has since become available to businesses who require aid as a result of the new tariffs, access to the federal work-sharing program has been extended, and a remission process has been implemented as a mechanism that relieves or rebates tariffs that put Canadian steel companies in lose-lose situations.
With U.S. Section 232 tariffs affecting countries globally, the federal government has implemented emergency safeguard measures with the intention to protect the Canadian steel market from a surge of foreign steel imports that would otherwise be destined for the U.S. There has already been evidence of an increase of steel products coming into Canada in large volumes that have had a harmful impact on Canadian producers, Canadian market pricing and the Canadian supply chain.
On October 25, 2018, the federal government implemented a provisional safeguard of 25 per cent surtaxes (tariff) and quotas on steel products from all countries (excluding the U.S. and Mexico) to be in effect until May 13, 2019. Seven steel products are considered at risk and have been included in this provisional safeguard:
- Steel plate
- Concrete reinforcing bar
- Energy tubular products
- Hot-rolled sheets
- Pre-painted steel
- Stainless steel wire
- Wire rod
The Canadian International Trade Tribunal (CITT) held a hearing in Ottawa for most of January 2019. The hearing consisted of seven mini-hearings broken up product by product and will allow the CITT to provide a recommendation to the Minister of Finance to decide if the test for imposing safeguard measures have been met. The CITT’s recommendation is expected in early April 2019.