‘Hard to look at the bright side'

Winnipeg Free Press

2 days ago

Lost sales, higher prices and material shortages have recently hit Manitoba businesses reliant on steel and aluminum — and it could get worse.
U.S. President Donald Trump announced last week he'd raise tariffs on steel and aluminum imports to 50 per cent, a doubling of the current levy. As of Monday afternoon, the change is proposed to begin Wednesday.
Current tariffs already have a 'deep and profound' impact across the supply chain, said Catherine Cobden, president of the Canadian Steel Producers Association.
MIKE DEAL / FREE PRESS Steel in various forms wait to be shipped to customers. Premier Wab Kinew and Selkirk Mayor Larry Johannson speak flanked by employees and in front of a giant Canadian flag hanging in one of the buildings at the Gerdau Manitoba Steel Mill, 27 Main St., Selkirk, Thursday morning. Reporter: Gabrielle Piche 250327 - Thursday, March 27, 2025.
Gerdau SA's Selkirk steel plant is a CSPA member. A majority of the company's steel is exported to the United States; it employs upwards of 500 Manitobans.
Gerdau previously directed a reporter to the CSPA for comment.
Across Canada, steel shipments to the United States dropped roughly 30 per cent in April, Cobden said. Twenty-five per cent tariffs came into effect in March.
'This will close the market for Canadian exports to the United States,' Cobden said of the prospect of a 50 per cent levy.
Selkirk Mayor Larry Johansson considers himself an 'optimistic kind of mayor.'
'(But) it's hard to look at the bright side when they raise the tariffs another 25 per cent,' he said.
For now, he's clocked activity in Gerdau's lot — plenty of semi-trucks. Gerdau employees haven't been laid off to date, the United Steelworkers confirmed.
A 50 per cent tariff would be a 'massive challenge' to Gerdau and similar mills, said Scott Lunny, a United Steelworkers director. 'Who pays the price for that, often, is workers.'
'There's customers I supply in the U.S. that, when he does things like this, they just stop buying and wait six weeks.'– Richard Bobrowski, Imperial Steel owner
Meantime, Imperial Steel hasn't laid off staff, despite recording a 25 per cent drop in sales year-over-year. The Winnipeg company, which makes thin-wall steel tubing, exported roughly 70 per cent of its products to the U.S. in 2024.
'You get going for a few weeks, and all of a sudden the president of the United States makes a statement,' said Richard Bobrowski, Imperial Steel owner.
'There's customers I supply in the U.S. that, when he does things like this, they just stop buying and wait six weeks.'
American clients are sourcing within their home country more, Bobrowski added. Imperial Steel struggles to give consistent pricing — between tariff changes and recent steel price fluctuations — and U.S. customers are hesitant to sign on, wondering what change could occur before a shipment arrives.
Imperial Steel currently splits the 25 per cent import tariff with its American patrons. It made a decision Monday: it won't swallow more than 12.5 per cent of a 50 per cent tariff.
'Which will then stress our company's ability to compete,' Bobrowski said. 'That's when the government has got to get involved.'
The Manitoba government tabbed $300 million for tariff-impacted businesses and farmers in its Budget 2025 contingency plan. The funding hasn't yet been used.
Evolution Wheel has avoided tariffs on both sides of the border, said owner Derek Hird. The Winnipeg-based construction-grade solid tire maker imports steel from the United States; it's exempt from Canada's reciprocal tariffs because of a carve-out for manufacturers.
The company mainly ships south of the border. But the turnaround time has lengthened — Evolution Wheel hasn't been able to source the specific steel it needs.
'Companies … are just buying up huge amounts of stock, and there's no supply,' Hird said. 'You're … fighting for scraps on what's available in the market right now.'
'Companies … are just buying up huge amounts of stock, and there's no supply,' Hird said. 'You're … fighting for scraps on what's available in the market right now.'– Evolution Wheel owner Derek Hird
Supply chain issues have resulted in lost sales, Hird added. Meantime, he's paying more for the steel he purchases.
So, too, is Northern Steel Buildings, a steel shop enterprise in Morden. It gets steel from Canada and the United States, and it pays Canada's 25 per cent reciprocal tariff.
The tariffed products can be cheaper than Canadian steel, said general manager Rick Friesen. That won't be the case if a 50 per cent fee comes online on Canada's side.
'If the Canadian government decides to retaliate … I think that will hinder the Canadian economy and growth,' Friesen said.
The economic uncertainty is damaging, said Chuck Davidson, president of the Manitoba Chambers of Commerce. 'We continue to … move the goalposts at the whim of the (U.S.) president.'
If businesses feel further tariff effects, government assistance could be needed, he added.
The Canadian Steel Producers Association is calling for Ottawa to implement tariffs to incentivize domestic steel use. Local producers compete with unfairly traded international steel that retails cheaper, Cobden asserted.
Manitoba is among the jurisdictions pledging to use more Canadian steel. In March, Premier Wab Kinew declared government infrastructure projects requiring steel would source Canadian.
These announcements are appreciated, Cobden said, but the projects might be too late to mitigate the damage of a 50 per cent tariff.
'If the Canadian government decides to retaliate … I think that will hinder the Canadian economy and growth.'– Northern Steel Buildings general manager Rick Friesen
However such a levy isn't a given, said Gary Mar, Canada West Foundation president. 'I think the best idea is to … wait and see what the president actually does first.'
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He believes Americans will push back against tariffs as they feel pain in their pocketbooks. The impact hasn't reached its peak, Mar stated, noting hundreds of U.S. politicians will run for office again next year.
Meantime, Manitoba companies are attempting to dodge tariffs. Northern Steel Buildings is consulting agencies about a reciprocal tariff exemption. It's heard of other companies being successful, Friesen said.
Eascan Automation in Winnipeg, which creates robots, is tapping Canadian companies to bulk order aluminum goods from Europe for direct shipment into Canada. The goal is tricky because Eascan orders custom parts and its supplier distribution centres are in the United States, said chief executive Camila Bellon.
Canada exported $20 billion worth of steel and iron to the U.S. last year and $4.1 billion in aluminum, per Natural Resources Canada data.
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Gabrielle PichéReporter
Gabrielle Piché reports on business for the Free Press. She interned at the Free Press and worked for its sister outlet, Canstar Community News, before entering the business beat in 2021. Read more about Gabrielle.
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