Canada Hopes to Dodge Trump Crackdown on Foreign Steel

Feb. 20, 2018
Canada will vigorously stress the importance of the trading relationship between the two key allies as it awaits a final decision.

Canada, the top steel and aluminum exporter to the U.S., is hopeful of being left out of a Trump administration crackdown on foreign shipments.

While the U.S. Commerce Department didn’t recommend giving its northern neighbor a pass when it outlined possible tariffs and quotas on Friday, it did acknowledge Canada’s importance to the U.S. aluminum industry. Canada accounts for about half of the U.S.’s almost 5 million-metric-ton aluminum deficit, and domestic smelters couldn’t fill that kind of void quickly, ING Bank strategist Oliver Nugent wrote in a note to clients Monday.

For steel, options under consideration include a heavy-handed approach on shipments from 12 countries including China and Russia while allowing for exemptions for allies like Canada and Japan.

“If any country should be granted an exemption, I put my bet on Canada,” Aluminum Association of Canada President Jean Simard said by telephone.

Canada and the U.S. are key allies and partners, with steel and aluminum industries that are highly integrated and supportive of North American jobs and manufacturing supply chains, Adam Austen, a spokesman for Canada’s Foreign Affairs Minister Chrystia Freeland, said in emailed statement Friday. Canada will vigorously stress the importance of that trading relationship as it awaits Trump’s final decision, Austen said.

U.S. aluminum producer Alcoa Corp. also said Friday that Canadian metal should be exempt. Rio Tinto Group also sees room for Canada to be excused.

Trump has until mid-April to decide on any potential action and could still seek negotiations with producers. The president last year ordered the Commerce Department to probe whether imports of steel and aluminum imperil U.S. national security, invoking the seldom-used Section 232 of the 1962 Trade Act, which allows the president to impose tariffs without congressional approval.

Imposing tariffs or quotas on metal imports comes amid North American Free Trade Agreement talks, in which the U.S. and Canada have traded regular barbs, accusing each other of not being flexible. The next round of NAFTA talks begins in Mexico next week.

“Certainly, any amount of poison being injected by the system makes it a lot more difficult to have a healthy continental economy afterward,” Perrin Beatty, head of the Canadian Chamber of Commerce, said by telephone Friday. “Everyone loses” if those recommendations are put in place, he said.

The aim of the tariffs is to boost U.S. output to at least 80% of capacity by cutting steel imports by 13.3 million metric tons and aluminum imports by 669,000 tons. But that risks a chain effect under which restrictions on U.S. imports encourage other nations to impose duties. Some U.S. lawmakers and fabricators have warned that trade protections would push up costs for domestic manufacturers.

“One hopes that the administration will look at this carefully and will recognize that it’s not in any body’s interest to precipitate tit-for-tat between Canada and the U.S. on this,” Beatty said.

By Natalie Wong and Danielle Bochove

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