U.S. President Donald Trump announced Monday he will impose tariffs of 25 per cent on steel and aluminum against multiple countries, including Canada, in his latest salvo of trade threats against other nations.
It’s not the first time, however, Trump has imposed such tariffs against Canada — in 2018, he imposed 25 per cent on steel and 10 per cent on aluminum. Those tariffs lasted for about a year.
Prime Minister Justin Trudeau has not commented yet on the proposed threat.
But as the tariffs come into effect, here’s what you should know about Canada’s trading relationship of both products with the U.S.
Canada is the number one exporter of steel to the U.S., according to data from the U.S. Department of Commerce, with about 566,000 metric tons sent across the border last month alone.
According to the Canadian Steel Producers Association, a total of $20 billion in trade of steel between the two countries takes place annually with 40 per cent of imports coming just from Canada.
The U.S. Census Bureau via the American Iron and Steel Institute showed a total of 6.6 million net tons were imported from Canada into the U.S. just last year, with Brazil sending slightly more than four million and 3.5 million from Mexico.
More than 9,500 aluminum workers live in Canada, according to the Aluminum Association of Canada, working in an industry it says generates more than “$200 billion in economic output in the U.S. economy alone.”
The United States imports more aluminum than steel with roughly half of all aluminum coming from other countries. The majority of aluminum imported to the U.S. comes from Canada.
Last year, Canada exported 3.2 million tonnes — twice the amount of the following nine countries combined, according to the U.S. Department of Commerce.
The Aluminum Association in the U.S. notes about 90 per cent of U.S. scrap aluminum comes from either Canada or Mexico, noting it would take billions of dollars in investment over decades to make the U.S. “fully self-sufficient for its metal needs.”
Nearly every industry that utilizes steel or aluminum would be impacted, experts say.
“If you think about the appliances we have at home, many of them use this,” Opher Baron, a professor of operations management at the University of Toronto, told Global News.
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“Also in terms of manufacturing and machinery, again, all of our machinery is from steel. If you want to increase your manufacturing base in the U.S. … you want to have good steel coming so you can product, you can get your own machines and so on. So those are things that will be harmed and prices will go up,”
It’s not just manufacturing companies that could be hit either, everything from auto makers to construction and even beverage production
“Steel goes into buildings, it goes into bridges and goes into schools, it goes into a number of products that we produce,” said Philippe Pourreaux, a partner of value creation at PwC Canada. “You also think about packaging of your soda is coming into aluminum cans, same thing with beer and other products.”
Ontario Premier Doug Ford criticized the tariffs on Monday, saying the province would “react hard.”
Ontario is home to six of the country’s 13 steel plants, including ArcelorMittal Dofasco in Hamilton, Ont., which Pourreaux calls a “hotbed” for steel production, Stelco in both Hamilton and Nanticoke, Ont., and Algoma Steel in Sault Ste. Marie, Ont.
Pourreaux notes between 70 to 80 per cent of Canada’s steel is produced out of Ontario, though some is also produced in provinces like Quebec, Alberta and Manitoba.
It’s not only Ontario though that could be hit. According to Investissement Quebec, Quebec accounts for nearly 90 per cent of aluminum produced in the country.
A tariff on aluminum, like steel, would impact more than just the plans that produce the products. The communities built around them would also experience issues.
“These are plant towns based on the aluminum industry,” said Saibal Ray, the James McGill chair in supply chain management at McGill University. “All the other people who are dependent on the plant, whether it is restaurants, whether it is people who drive trucks, everything will be impacted.”
He added while the tariffs may not lead to layoffs at the plants themselves, tariffs could lead to companies making investments into the U.S. to avoid tariffs or scrap expansion plans which could prevent new job hires.
The last time Trump imposed tariffs on Canada’s steel and aluminum industries, he cited national security as the reason.
This time, Trump’s trade adviser Peter Navarro said the measures would help producers in the country and shore up America’s economic and national security.
“The steel and aluminum tariffs 2.0 will put an end to foreign dumping, boost domestic production and secure our steel and aluminum industries as the backbone and pillar industries of America’s economic and national security,” he told reporters.
“This isn’t just about trade. It’s about ensuring that America never has to rely on foreign nations for critical industries like steel and aluminum.”
Pourreaux said there’s uncertainty as to why Trump is pushing the tariffs this time, but he believes Trump’s “America First” stance could be part of it.
However, he added it was difficult to say if it was a short or long-term goal, as it could take several years to open new plants or revive previously-abandoned facilities in the span of Trump’s final term.
Baron said he believes a big purpose behind tariffs for Trump is to change things, using it as a negotiating tactic.
“One of the issues when you’re running a big administration as the U.S. is that the standard ways of doing things take forever,” Baron said.
By putting out the tariff threats early, Trump is able to get movement from other countries. Baron pointed to recent actions taken by Canada and Mexico on their shared borders with the U.S. that led to the postponement of widespread 25 per cent tariffs.
“He doesn’t have years, he wants things to move fast, so I think this is the main motivation for him,” he said.
—with files from The Canadian Press
