Roughly five months afterDonald Trump imposed steep new tariffs on foreign steel, officials are already seeing a “surge” in certain types of steel products coming into Canada and as a result, considering what Finance Minister Bill Morneau calls “exceptional” safeguards.
Speaking with reporters in a steel factory in Hamilton, Ont., Morneau said the government will consult with steel industry stakeholders over the next 15 days that will determine what kinds of safeguard measures could be imposed to keep seven types of foreign steel products from flooding the Canadian market.
Those products – steel plate, concrete reinforcing bar, energy tubular products, hot-rolled sheets, pre-painted steel, stainless steel wire and wire rod – are among the ones Morneau said have already been identified as surging into the domestic market in response to the 25 per cent tariffs in place on steel goods destined for the American market.
He did not provide evidence of that surge but said what officials are seeing so far has them worried.
“We’ve seen increases in imports, that’s an important reason why we’ve come forward today with seven products that we’re consulting on,” he said.
“That surge in imports leads us to be concerned.”
Jesse Goldman, a lawyer representing the Canadian Coalition for Construction Steel, said he expects the government to study the information for a few weeks before making a decision.
Under the rules of the World Trade Organization, provisional safeguard measures “should be in the form of refundable tariff increases, and may be kept in place for a maximum of 200 days.”
They are only to be applied in critical circumstances, which the WTO defines as “circumstances where delay [of imposing the measures] would cause damage that would be difficult to repair” and “on the basis of a preliminary determination that there is clear evidence that increased imports have caused or threaten to cause serious injury.”
That suggests the Canadian government would need to provide clear evidence of industrial harm to be able to defend the application of the measures.
But, he said, the situation facing the country in light of Trump’s actions is also unprecedented.
“Our government believes that the tariffs levied by the United States represent an exceptional circumstance and that’s why provisional safeguards are being considered,” he said.
“This action today, this consultation, is exceptional. We find ourselves in an exceptional situation where we need to think about how we keep the market stable in the long term.”
While Trump imposed the tariffs on 25 per cent on foreign steel and 10 per cent on foreign aluminum back in March, he had granted an exemption to Canada, Mexico and the European Union before refusing to renew that in May.
Immediately, Canada, Mexico and the E.U. announced they would take retaliatory measures.
On July 1, Canada imposed roughly $16.6 billion worth of tariffs on hundreds of different types of American-made goods, in addition to equivalent tariffs on American steel and aluminum.
However, the looming question has been how to limit harm to Canadian businesses and workers from those measures.
Jesse Goldman, a lawyer representing the Canadian Coalition for Construction Steel, said industry and union stakeholders are not unanimous on how to deal with the issue and he expects debate on how — or if — the federal government should proceed with the safeguards.
He said the coalition, which represents construction steel suppliers, fabricators, service centres, and importers, is calling on Ottawa not to initiate a safeguard on construction steel. The coalition also has support from labour unions and other groups from the construction industry.
It warns that any measures the government takes to protect the country’s steel producers must be carefully designed to ensure they avoid putting more than 60,000 Canadian construction jobs at risk and causing harm to the national economy.
“The government needs to be really cautious about this,” Goldman said.
“They’re doing the right thing by consulting, but it’s going to be very important that they take a broad look at the industry and they hear from as many stakeholders as possible…
“We’re convinced that their hearts and minds are in the right place. We just want to make sure they get to the right conclusion on this.”
The retaliatory steel tariffs introduced by Canada against the U.S. in response to the American levies are already providing a lot of protection for the steel industry, Goldman said.
He warned that imposing safeguards on the rest of the world — through a combination of quotas and surtaxes, or surtaxes only — would likely cause a supply shortage of steel in Canada.