Essar Algoma wants tariffs gone, explore quota system (USW is not in favour of quotas

Canadian steelmaker Essar Steel Algoma Inc. yesterday appealed to the Commons trade committee for help against U.S. duties. One factory owner told MPs’ tariff hearings that all Canadians are now paying for cross-border taxes.

“This has had a significant impact on Algoma’s exposure to the United States in the short period of time these tariffs have been in place,” said CEO Kalyan Ghosh. “We have seen a drop in exports to key states where we send the majority of our products – Minnesota, Michigan, Illinois and others.”

American tariffs are 25 per cent on Canadian steel and 10 per cent on aluminum. Cabinet imposed comparable retaliatory tariffs on U.S. imports July 1 worth more than $300-million.

“We recommend the government explore a quota-based system in exchange for tariff exemption,” said Ghosh; “Trade quotas could be divvied up between Canadian steelmakers based on historical performance”, he said.

One manufacturer said the cost of tariffs is now buried in everyday consumer costs. “Canadian steel suppliers increased their prices to benefit from their competitors’ sudden cost increases and the shortfall in supply,” said Leigh Coulter, president of GGS Structures Inc. of Vineland Station, Ont., a manufacturer of prefabricated commercial buildings.

“The price of steel has gone up four times this year for a total 28 per-cent increase since January,” said Coulter. “Aluminum is up nine per-cent. As my costs increased, so did the price our customers paid for their greenhouses, dairy barns and storage buildings. In turn, they increased the price of their goods and on and on it went, as everyday Canadians have found their food bills have increased significantly.”

Liberal MP Mark Eyking (Sydney-Victoria, N.S.), chair of the trade committee, told yesterday’s hearing that “a lot of Canadians have a sigh of relief right now” with the September 30 signing of a tentative U.S.-Mexico-Canada treaty to succeed the 1994 North American Free Trade Agreement.

“I didn’t hear that,” said Conservative MP Colin Carrie (Oshawa, Ont.). “Maybe it was the sucking sound of concern over jobs leaving the country if we don’t get things in order.”

The new trade pact did not address steel and aluminum tariffs, or 20-per-cent duties on Canadian softwood lumber exports imposed by the U.S. Department of Commerce in 2017.

“We all thought that when we got the agreement with the United States these tariffs would go away,” said MP Carrie. “What’s happened is the government has failed to even have a timeline where the tariffs can go away.”

Cabinet estimates the U.S. has a $2-billion annual trade surplus with Canada in steel. The trade committee in a 2017 report The Canadian Steel Industry’s Ability To Compete Internationally noted Canada has run a trade deficit in steel since 1996. Canadian steel output as a portion of world production has fallen by half in the past 20 years.

By Jason Unrau