The Canadian steel industry is caught in a dangerous pincer.
U.S. tariffs on Canadian steel are doubling from 25% to 50%.
‘Dumping’ of steel into our market from China is undercutting prices.
Both aim at weakening – and perhaps eliminating – the Canadian steel industry.
China wants further domination of the global steel sector, and they are willing to sell at low prices (even at a loss) to achieve that goal, knowing that steel sector domination makes military domination much more feasible.
The United States wants to eliminate its dependence on foreign steel, and lumps Canada into the ‘foreign’ category despite our deep economic integration and long-term trade ties. Annexationist elements within the U.S. also seek to weaken the Canadian economy and thus generate a level of desperation that – they believe – would push more people to want to join the U.S.
A real threat to the Canadian steel sector
In a June 4th statement, the Canadian Steel Producers Association made clear these tariffs are a real threat:
“Today, US President Donald Trump’s 50 per cent steel tariff came into effect creating chaos and disruption throughout North American supply chains and delivering a crushing blow to the Canadian steel industry.
“Given the urgency, the leadership of our member companies along with representatives of the United Steel Workers Canada will be in Ottawa tomorrow to meet with Cabinet Ministers and other government officials to urge immediate action for Canadian steel.
“To stand up for our critical industry, the Government of Canada must immediately implement new tariffs at our own borders to stem the flow of unfairly traded steel from entering Canada and cannibalizing our industry. Furthermore, we need urgent action to protect our industry by fully re-instating our retaliatory tariffs on the US steel and match this latest American escalation.
“At a 25 per cent tariff rate, we saw significant layoffs, curtailed investments and a significant drop of shipments to the United States. At a 50 per cent tariff rate, the U.S. market is effectively closed to Canadian steel, leaving billions of dollars of Canadian steel without a market.
“Canadian steel producers play a unique role in Canadian economic and national security. Without Canadian steel feeding our industrial supply chains and creating jobs in communities across our country, we will be weaker at a time when we must be strong.
“The Canadian Steel Producers Association stands with our allies at the United Steelworkers Union Canada during this challenging time. “
In the face of such a pincer movement, the Canadian government must act
There are four steps the government should immediately take to protect the Canadian steel industry.
First, triple funding for efforts to confront steel dumping. A combination of enhanced port inspections and more robust trade law enforcement will speed the process of determining when steel is being dumped on the Canadian market.
Second, create a strategic steel stockpile. The government should directly order larger quantities of steel from Canadian steel makers to create a strategic stockpile. This would protect Canada from short-term steel market shocks and stabilize Canadian steel companies, helping to preserve employment and ongoing production.
Third, ensure Canadian steel is used in Canada’s military build-up to the greatest feasible extent. I wrote about that in detail here so I won’t elaborate much further in this article. Suffice it to say that a large-scale military buildup is a great opportunity to support the Canadian steel sector.
Fourth, impose countervailing tariffs on the United States. Canada must show resolve and demonstrate that Trump’s unjustified trade actions will be met with a response. We should also be reasonable and stipulate that any increased tariffs on the U.S. will be lifted immediately upon the U.S. lifting its tariffs. Canada did not ask for this tariff fight, but we must be prepared to endure it.
Why protect the steel industry?
As someone who would once have considered himself a free market purist (I still think the free market should be paramount in many respects), it is difficult to advocate for government intervention. But we must adapt to the times in which we live. The U.S. and China are not following free market principles. They are using government measures – tariffs, subsidies – to benefit their steel industries and damage the steel industries of countries like Canada. In the face of such actions, Canada would be naive to just sit back and ‘let the market work,’ because that would mean watching our steel industry erode.
Canada needs a robust steel industry, above all because of the many ways the industry is essential to military production. Canada must build up our military, and we must produce more of our equipment domestically. Without a robust steel industry, that is impossible.
Protecting our steel industry is a national defence and national security imperative, and that means government action is a necessity.
Spencer Fernando
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