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Canadian steel tariffs less likely under Trump 2.0, U.S. trade experts say, but disruption still a risk

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Calgary

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A U.S. trade attorney and a former congressman say a second Trump administration may not direct tariffs specifically at Canada, but there’s concern this country could get swept up in the broader universal tariff Trump is proposing.

Focus of incoming Trump administration this time seems to be Chinese steel, says Washington lawyer

Paula Duhatschek · CBC News

·

Essar Steel Algoma plant at twilight.

The Algoma Steel plant in Sault Ste. Marie is seen at twilight in March 2018. After U.S. president-elect Donald Trump promised steep tariffs on the campaign trail this year, the steel construction industry has been trying to anticipate how such a move might affect Canada. (Justin Tang/The Canadian Press)

Canada is right to be concerned about trade with the U.S. under a second Trump administration, but specific tariffs on Canadian steel and aluminum seem less likely this time around, according to D.C.-based trade policy lawyer.

“I’m not expecting any tariffs aimed at Canada specifically — I think the risk for Canada is that you just get swept in with tariffs on everywhere,” said Leah Scarpelli, a partner at the Washington law firm ArentFox Schiff, speaking on the sidelines of a steel construction industry conference in Calgary on Wednesday. 

On the campaign trail, president-elect Trump called himself the “tariff man” and floated the idea of a minimum tariff of 10 per cent on all imports entering the United States. 

The steel construction industry, in particular, has been trying to anticipate what a second Trump administration might mean. During his first term in office, Trump called NAFTA the “worst trade deal in history” and imposed a 25 per cent tariff on Canadian steel products and 10 per cent on Canadian aluminum products, forcing Canada to retaliate. Eventually, an exemption was granted.

“Obviously, to a very high degree, we’re concerned about what’s to come,” said Keanin Loomis, president of the Canadian Institute of Steel Construction, which represents engineers and fabricators who build with steel. 

WATCH | Canada braces for what’s to come with Trump’s promised U.S. tariffs: 

Canada braces for tariffs, trade disruption with 2nd Trump presidency

The federal government is bracing for trade disruption under a second Donald Trump presidency, with former secretary of commerce Wilbur Ross saying Trump will not only focus on tariffs, but target Canada’s supply management sectors during his second term.

Loomis says he’s not only concerned about tariffs on Canadian steel, but also the risk that Canada might then impose retaliatory tariffs of its own and disrupt the flow of U.S. steel into this country. A lot of the steel that is used in building construction in Canada comes from the U.S., he says. 

“It’s very early, reading the tea leaves, [but] we expect for there to be disruptions.” 

Alignment on China policy important for CUSMA

Scarpelli, the trade lawyer, says that after a period of status quo, a second Trump presidency will likely act as a reset for relations between Canada and the U.S. 

The biggest change with the incoming administration will likely be in how much “predictability” can be expected, she says, noting it remains to be seen how priorities will be steered by appointees in the Department of Commerce and Department of State.

A woman in a black top and brown suit is pictured in a conference ballroom in Calgary.

Leah Scarpelli, a partner focusing on trade policy at the Washington law firm ArentFox Schiff, says Trump appears less concerned about Canada than China when it comes to steel. (Paula Duhatschek/CBC)

But as it stands, Scarpelli says Trump today appears less concerned about Canada, and more squarely focused on Chinese overcapacity and the risk of that country dumping cheap steel into the U.S., potentially using Mexico as a backdoor. 

Canada recently imposed 25 per cent tariffs on Chinese steel and aluminum, following the lead of the U.S., along with country-of-melt regulations intended to detect cheap foreign steel and keep it from being dumped into the Canadian market.

“The focus certainly is on China,” said Scarpelli, adding alignment on the country would be an important factor in the renegotiation of the Canada-U.S.-Mexico Agreement (CUSMA).

For his part, François Desmarais, a vice-president with the Canadian Steel Producers Association, feels “cautious optimism” about trade relations between the two countries.

“Canada is in a way better spot now than we were six years ago. We definitely improved some of our trade policy, we’re more integrated with the U.S., and I think we fully realize and share the common concern of the U.S. when it comes to our industry,” he said.

“The biggest challenge that the steel industry [faces] globally is Chinese overcapacity.”

According to the Canadian Steel Producers Association, Canada exports about six million tonnes of steel to the U.S. annually, worth about $11 billion Cdn. Americans export about 3.5 million tonnes of steel to Canada, worth about $8 billion Cdn. 

WATCH | Freeland ‘sympathetic’ to U.S. trade concerns about Mexico: 

Freeland ‘sympathetic’ to U.S. trade concerns about Mexico

Deputy Prime Minister Chrystia Freeland says she’s heard U.S. officials and business leaders warn that Mexico is not acting the way Canada and the U.S. are in its economic relationship with China. Freeland did not say whether she agrees with Ontario Premier Doug Ford’s suggestion that Ottawa and Washington create a bilateral trade agreement if Mexico continues to be a back door for importing cheap Chinese materials.

Canada’s window of opportunity on trade

Former U.S. congressman Phil English agrees that having harmonized policies around foreign steel will be a “good starting place” for Canada and the U.S., though he, too, said there’s a risk this country could end up on the wrong side of a universal tariff wall.

He believes Canada has a window of opportunity now to make the case for free trade between the two countries. 

“[We’re] coming off of a hot campaign where there are new ideas and where simple ideas are being put out that need to be nuanced,” said English, in an interview with CBC News in Calgary.

A man in a navy suit and blue patterned tie is pictured in a Hyatt Regency ballroom.

Former U.S. congressman Phil English says Canada has a window of opportunity for making a case for free trade between the two countries. (Paula Duhatschek/CBC)

“I think it’s very important that Canada re-engage, recognizing that many people now in Congress who are going to be making these decisions have never been involved in this before.”

This is particularly important, he says, with CUSMA set for a review in 2026.

“I think it may occur quicker than that, and I think it may take the form of a renegotiation,” he said. 

“The issues that divide the parties are deepest between the United States and Mexico, and I think Canada has an opportunity to play a very important role.”

ABOUT THE AUTHOR

Born and raised in Calgary, Paula Duhatschek is a CBC Calgary reporter with a focus on business. She previously ran a CBC pop-up bureau in Canmore, Alta., and worked for CBC News in Kitchener and in London, Ont. You can reach her at paula.duhatschek@cbc.ca.

    with files form Jonathan Migneault

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