Now, Canada has taken steps to respond to increasing worries about flooding of markets with steel and aluminum, especially from China. In October 2022, the Canadian government announced a 25% tariff on these imports. This policy brought important relief to domestic producers facing unfair competition. In November, they made this explicit by introducing a new requirement for importers. Now, importers need to declare the country of origin for the steel where it is “melted and poured.” These steps are very much in line with their government’s long-held pledge to strengthen the Canadian steel sector, which is facing severe global challenges.
Prime Minister Mark Carney has led the charge on these efforts, most notably by announcing stricter regulations regarding steel imports. To his administration’s credit, they’re trying to address what most advocates would concede are highly offensive overcapacity shenanigans by the Chinese. CHINA’S STEEL EXPORTS Last year, China’s steel exports reached its highest ever 115 million tonnes. This increase caused concern over the impact on Canada’s domestic market, where offshore steel imports increased from 19% in 2014 to 39% in 2022.
Industry Perspectives on Tariffs and Regulations
It really works Catherine Cobden, president of the Canadian Steel Producers Association expressed passionate support for the federal government’s actions. She reiterated that these rules are the most effective way to respond to China’s behavior. The association continues to insist that rising imports damage Canadian steel makers. These U.S. producers are affected by increased costs of production, and they are increasingly undercut by foreign competitors.
Others expressed little alarm at the prospect of massive new imports. Dan Ciuriak, an international trade expert, stated, “As far as I can tell, there is no imminent flood of imports into the Canadian market.” He noted the urgent crisis caused by dumping of steel. He worries that the current rules won’t do enough to address the industry’s systemic issues.
Ken Neumann, national director for the United Steelworkers union in Canada reinforced the need for urgent action on illegal steel dumping. He reiterated that halting these practices is essential to leveling the field for U.S. producers. His comments show a developing exasperation from the labor base with foreign competition that fosters a race to the bottom with home-grown prosperity.
Economic Implications of New Measures
The Canadian federal government’s recent actions have a real costing attached to them. These new tracing and reporting requirements for imported steel impose significant operational costs on businesses. Critics are concerned that overreaching new regulations will unintentionally increase costs to the consumer. Second, they think that these rules will limit access to markets by honest traders.
Dan Ciuriak remarked on the added challenges, stating, “That’s all theatre as far as I am concerned.” He is concerned that the government’s actions will not address the underlying issues in the steel market. His worries are part of a general feeling that these measures actually work.
For context, Canada has had anti-dumping provisions since 1904 to combat unfair trade practices. These provisions have come a long way, largely due to the dynamic and fast-changing nature of the global steel industry. This critical industry has been especially hurt by trade distortion and protectionism. While these comprehensive measures have existed for quite some time, the enforcement of these impactful measures is still up for discussion among experts.
Future Outlook and Concerns
Looking beyond the short-term, the most troubling development is China’s steel overcapacity. Industry insiders expect this capacity to jump to 250 million tonnes in just the next ten years. This boom will lead to more of our expanded exports being shipped through markets such as Canada. Yet another potential change looms ominously over Canadian producers already faced with pressure from increasing imports.
And while the Canadian International Trade Tribunal has been largely favorable to applications suggesting that dumping has occurred. This ruling is significant because it further establishes the government’s overt priority of boosting protection of domestic industries. Still, stakeholders are understandably cautious as to how effective these protective measures will be, given the unfortunate persistence of global trade headwinds.
