Cheap steel influx worries Canadian government

By Barry Ellsworth

TRENTON, Canada

Fear that a “surge” in cheap steel flooding the Canadian market may force tariffs being placed on imported steel from other countries, the Canadian finance minister said Tuesday.

Bill Morneau made the announcement against the backdrop of a mill in Hamilton, Canada’s steel capital. About 60,000 work in the industry.

Dumping cheap steel in Canada took on life when U.S. President Donald Trump enacted a 25 percent tariff on the metal entering the United States. Steel has to have somewhere to go and it is too expensive in the U.S. market.

“Canada is now at risk for a surge,” Morneau said, the concern being that the influx could hurt the Canadian steel industry and its workers.

The finance minister said there would be a 15-day consultation process with the public and industry leaders to decide what action to take.

If tariffs are imposed on steel from other countries, it would be unprecedented because it would be done under an obscure and unused section of the Customs Tariff Act.

“This has never happened before,” said Cyndee Todgham Cherniak, of the Toronto Lexsage international trade law firm. “But we say that about Trump, and about NAFTA [North American Free Trade Agreement], and many things these days.”

Section 55 of the customs act allows Canada to put duties on immediately, before determining if “goods are being imported under such conditions as to cause or threaten serious injury to domestic producers of like or directly competitive goods.”

In effect, Trump’s tariffs have increased imports of steel to the point that producers like China are looking to dump steel at rock bottom prices in Canada and other countries, hurting the domestic industry. China was already overproducing steel, causing a world surplus. If Canada enacts a 25 percent tariff, it would make the Canadian market unattractive, the same way the tariffs have done in the U.S.

Countries with which Canada has a free-trade deal, such as South Korea, would not be subject to any steel tariff.