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Asian Steel Floods Canada After US Tariffs

Thursday, June 28, 2018

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Exports of steel pipes and tubes from some Asian nations shifted from the United States to Canada this spring, raising concerns among Canadian manufacturerss, and the country's government is reportedly taking action to prevent further flooding from steel producers looking to avoid U.S. steel tariffs.

The increase in imports threatens jobs in the country’s energy steel-making sector, one of the biggest consumers of the tubular products. Sales of “oil country tubular goods” are already slow, and increased competition from imports worsens the situation, Neil Rasmussen, president of Alberta-based Bri-Steel Manufacturing, told Reuters.

According to Bloomberg, Canadian government response plans follow similar measures being considered by the European Union, aimed at driving away steel that might have otherwise wound up in the U.S. Canadian counter-tariffs on U.S. steel, aluminum and other products are set to go into effect July 1.

Previous Action

Earlier this month, the United States allowed new tariffs on steel and aluminum imports from Canada and European Union countries to take effect Friday, triggering threats of retaliation from some of the country’s major trade partners.

© iStock.com / Leonid Eremeychuk

Steel pipes and tubes used in drilling and transporting crude oil moved largely into Canada this spring, and the government is reportedly taking action to prevent a possible further flooding from steel producers looking to avoid U.S. steel tariffs; these measures will cover certain countries, including China.

The EU opened a case in the World Trade Organization in response to the measures, which placed a 25 percent duty on steel imports into the U.S. and a 10 percent duty on aluminum imports. The tariffs were first announced in early March and officially went into effect later that month, but for many countries the duties were delayed while the U.S. continued larger trade negotiations.

Canada, the single largest exporter of steel to the U.S., and Mexico were both immediately exempt from the tariffs during U.S. attempts to renegotiate NAFTA, the free-trade agreement among the North American countries.

Canadian Measures

According to a steel industry source speaking to Reuters, Canadian producers are losing bids on tubular goods to South Korea, Mexico, Romania and China.

Measures currently under consideration in Canada are slated to include new quotas on certain steel imports to prevent dumping, with tariffs being applied above that threshold. U.S. steel tariffs have allowed a possible flood of cheap imports, according to Sean Donnelly, chief executive officer of ArcelorMittal Dofasco, the Canadian unit of steelmaker ArcelorMittal.

Steel industry entities have been pushing for safeguards, which could be applied provisionally, assuming an investigation was ongoing.

Additional tariffs on foreign steel will continue to have an impact on the Canadian economy and raise costs in an already strained housing sector. Only a few companies produce steel in the country proper. Developers, steel fabricators and construction companies rely on imports for creating materials such as rebar.

Under condition of anonymity, one executive at a Canadian pipeline company said it was accepting supply quotes from more countries than before, which allows for more flexibility. The cost inflation will continue to put pressure on Canada’s oil industry, however.

   

Tagged categories: Economy; EU; Europe; Government; NA; North America; Program/Project Management; Steel

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