Trump's steel tariffs against Canada have been working just how he wants
For the hundreds of Canadian steelworkers who lost their jobs this year amid President Donald Trump's trade war, talk of reaching a trade deal between Canada and the U.S. is coming too little, too late.
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For Trump, the effects — driving down imports, boosting the U.S. steel industry and winning concessions from Canada — seem to be getting him what he wants.
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Initially faced with a 25 per cent tariff on exports to the U.S., which ballooned to 50 per cent in June, Canadian steel is desperate for a resolution. Trump imposed the levies under Section 232 of the Trade Expansion Act, declaring steel imports a threat to national security and citing the need to protect American industry. His rationale was that curbing imports would reduce supply and ramp up prices, giving U.S. steel additional revenue to invest in strengthening domestic production.
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About US$7.7 billion ($10 billion) in Canadian steel and iron was exported to the U.S. last year, with the American market worth 90 per cent of Canadian exports.
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Negotiating teams are staring down an Aug. 1 deadline, when Trump said he'll be hitting Canada with yet more tariffs — on top of the steel, aluminum, lumber, copper, autos, and energy already being whacked, as well as any goods not exempted by the U.S.-Mexico-Canada trade agreement (USMCA).
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So far, the Canadian steel industry has been one of the hardest hit by Trump's tariffs, and it's bracing for things to get uglier.
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'By the end of May, before we even hit the 50 per cent tariffs, we saw a 30 per cent decline in production across the country,' said Catherine Cobden, president and CEO of the Canadian Steel Producers Association (CSPA). She doesn't have the June numbers yet, but she expects it be 'much worse.'
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Canadian producers can't afford to absorb the 50 per cent tariff on six million tonnes of production, the amount that was destined for the U.S. market and is now subject to the levy, Cobden explains.
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While some analysts expected the U.S. market to keep buying heavily taxed Canadian steel to satisfy demand until domestic production increased to fill the gap, that's not playing out in practice. At least not yet.
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