Canada is Preparing Steel Quotas, Tariffs on
China and Others
The Canadian government
is preparing new measures to prevent a potential flood of steel imports from global
producers seeking to avoid U.S. tariffs, according to people familiar with the plans.
The Canadian dollar weakened and shares in Stelco Holdings
Inc. soared.
The measures are said to
be a combination of quotas and tariffs aimed at certain countries including China,
said the people, asking not to be identified because the matter isn’t public. The
moves follow similar “safeguard” measures being considered by the European Union
aimed at warding off steel that might otherwise have been sent to the U.S. It comes
alongside Canadian counter-tariffs on U.S. steel, aluminum and other products set
to kick in on July 1.
The steps intensify the
fallout from U.S. President Donald Trump’s trade fight, in particular U.S. tariffs
of 25 percent on steel and 10 percent on aluminum that hit Canada, the EU and other
nations. The moves have prompted retaliation from the U.S.’s biggest trading partners,
and forced companies like Harley-Davidson Inc. to shift production.
The Canadian measures are
expected to include new quotas on certain steel imports to prevent dumping, with
tariffs applied above that threshold, the people said. The announcement could come
as early as next week, though the government hasn’t finalized its plans, the people
said. A spokesman for Finance Minister Bill Morneau declined
to comment. Representatives for Foreign Minister Chrystia
Freeland, who handles U.S. trade issues, didn’t immediately return requests for
comment.
Canadian steel imports
in 2017 totaled $9 billion, according to U.S. data, with 55 percent of that coming from the U.S. The next biggest
sources of Canadian steel are China, South Korea, Brazil and Turkey, the data show.
The U.S. steel tariffs
open the door to a potential flood of cheap imports, said Sean Donnelly, chief executive
officer of ArcelorMittal Dofasco, the Canadian unit of
ArcelorMittal of Luxembourg.
Steel groups have been
pressing for safeguard measures,
which could be applied provisionally pending an investigation. Joseph Galimberti, president of the Canadian Steel Producers Association,
said his members are seeing the impacts of steel diversion in Canada’s market. The
industry group’s members include ArcelorMittal Dofasco,
Stelco Holdings Inc., Essar Steel Algoma Inc. and others.
Stelco, one of the few publicly
traded steel producers in Canada, jumped as much as 2.5 percent in Toronto and was
up 1.7 percent to C$25.90 at 12:36 p.m while Alcoa Corp.
rose 2.6 percent to $45.40. The loonie erased gains, weakening
0.1 percent to 75.13 U.S cents.
Any additional tariffs
enacted on foreign steel will have a ripple effect on the Canadian economy and raise
costs in the already-crunched housing sector.
Only a handful of companies
produce steel in the country and construction companies, steel fabricators and developers
rely on imports for various types of steel including those used for residential
building such as rebar.