Increased Steel and Aluminium Tariffs to 50% by US on Canada: Immediate Loss of Half of all Canadian Steel and Aluminium Sales Exports into the US. Integrated Economies between the US and Canada a Myth in Certain Sectors

 


Technological advancements in the manufacture of steel have made production more efficient and many jobs were replaced by automation. In the period of time between 1960 to today, American steel mills have decreased from an average of 700,000 workers to just 83,000 and within the last 40 years, the productivity of labour has increased more than five times from approximately 10 man-hours per finished ton to under 2. During that time, the US economy shifted from manufacturing to more service-focussed businesses. After being the largest producer in the world, the US has become the largest steel importer in the world, while only producing a small percentage of the overall steel output 
https://blog.boydmetals.com/the-past-present-and-future-of-the-american-steel-industry#:~:text=Slowly%2C%20American%20factories%20that%20were,700%2C000%20workers%20to%20just%2083%2C000. 

President Trump’s decision to double tariffs on both steel and aluminium to 50% will result in an injury to Canada’s industries and will basically shut-out 50% of the sale of steel and aluminium produced in Canada to the US. Canada is currently the largest supplier of steel and aluminium to the US.

President Trump stated that the once world’s larger producer of steel, U.S. Steel, will keep its headquarters in Pittsburgh as part of what he called a "planned partnership" between the iconic American steelmaker and Japan-based Nippon Steel, which has sought to buy it in the past. Nippon Steel's nearly $15 billion bid to buy U.S. Steel was blocked by former President Joe Biden. After Mr. Trump became president, it was subject to another national security review by the Committee on Foreign Investment in the United States https://www.cbsnews.com/news/trump-us-steel-nippon-steel/. The details of the new arrangement have not as of today’s date been released.

The United Steelworkers union (USW) is warning that President Trump’s decision to double tariffs on both steel and aluminium to 50% is a devastating blow to Canada’s industries and the hundreds of thousands of jobs they support. “A 50% tariff would completely shut us out of the U.S. market,” said Marty Warren, United Steelworkers National Director for Canada. “This isn’t trade policy – it’s a direct attack on Canadian industries and workers. Thousands of Canadian jobs are on the line and communities that rely on steel and aluminium are being put at risk https://usw.ca/us-tariffs-doubled/. The USW is asking for reciprocal tariffs against the US on imported steel as well as well as requesting that the government support affected workers through reform of Employment Insurance and wage subsidies and job guarantees. It will not matter as it is the intention of the US is to be self-reliant on its steel produced domestically. Apparently, the US is not interested in an integrated economy with respect to steel and aluminium manufacturing and products produced therefrom, and in other sectors as well. There will no longer be a business as usual approach. 

The US has concerns in regards to Luxembourg-headquartered ArcelorMittal’s substantial Canadian presence, accounting for approximately half of total Canadian steel production. The firm has also established a strategic partnership with China Oriental Group, and is a 37% shareholder in the firm https://www.rbc.com/en/thought-leadership/metal-wars-five-things-to-watch-for-as-u-s-steel-and-aluminum-tariffs-roll-out/.  There is no ambiguity that the US has significant concerns with respect China, including the flooding of Chinese-produced steel into the international market which has driven the prices down significantly. Notably, China's steel subsidisation rate, as a percentage of firm revenues, is ten times higher than that of Organisation for Economic Co-operation and Development (OECD) countries. Chinese steel exports have more than doubled since 2020, reaching a record level of 118 million tonnes in 2024. This surge has disrupted steel markets in OECD economies, leading to a fivefold increase in anti-dumping measures since 2023 https://www.oecd.org/en/about/news/press-releases/2025/05/surging-excess-capacity-threatens-steel-market-stability-employment-and-decarbonisation-plans.html. 

The chances for international market competition for Canadian steel or aluminium is no way on normative terms and it will take time to find new markets but, in the interim, it will be a necessity to explore every opportunity in developing federally-based Canadian business opportunities as well as inter-provincial business development through the removal of inter-provincial trade barriers which have little to no value in modern economic times, which will likely require equilibrating regulatory standards in various professions, trades and other business matters across the country.

Nicholas J. Cartel

www.accendexe.com

The above-referenced opinion does not constitute legal advice or financial advice but are views of the author. 




Comments

Post a Comment

Popular posts from this blog

G7 Statement on Shared Concerns: Disconnect with the Economic Models of the United States and China. Possible Impacts on Industry and Biotechnology Security.

Image
Finance ministers and central bank governors from the Group of Seven (“G7”) democracies prepared a summary document to paper over their respective differences while meeting in Banff, Alberta this past month in preparation for the formal G7 meeting to take place in Kananaskis in June. Officials called for a common understanding of how "non-market policies and practices" undermine international economic security. The statement did not mention President Trump nor the tariffs imposed internationally but clearly it will need to be front and centre at the meeting. Nor did the statement address China, the other world leader in economic terms, and the concerns of massive state subsidies and its export-driven economic model. The G7 statement called for an analysis of market concentration and international supply chain resilience. "We agree on the importance of a level playing field and taking a broadly coordinated approach to address the harm caused by those who do not abide by t...
Read more

Fading Investment Opportunities in Canada’s Oil and Gas Industry with Excessive Dependence on US Refineries and Excessive Regulation: US Shale Oil and Burgeoning US Energy Independence

Image
  Together the US and Canada produce more oil than anywhere else on Earth, according to SP Global.  President Trump, who took office on January 20, 2025, for his second term, had planned to charge a 25% tariff on Mexican crude and a 10% levy on Canadian crude beginning in March, which has now been removed. Nonetheless, the threat of tariffs exposes Canada’s vulnerability.  Canada, the biggest oil supplier to the U.S., exports some 4 million barrels per day (bpd) of crude into the U.S., 70% of which is processed by Mid-Continent refiners. A barrel of Western Canada Select (WCS) heavy crude in Alberta has been reported to trade at approximately $13.00 below Western Texas Intermediate (WTI), as compared with Mars sour, a US medium sour crude produced along the US Gulf of Mexico (America), at approximately $2.00 above WTI. The US continues to be the largest source of Canada’s imported crude oil. In 2023, 72.4% of Canada’s oil imports originated from the US, compared to 72.0% ...
Read more

Competition Bureau announces Market Study into Competition in the Domestic Passenger Airline Industry

Image
  On July 29, 2024, the Competition Bureau provided a news release that it is officially launching its market study of competition in domestic air passenger services. Specifically, the Bureau plans to examine three key topics:  • the state of competition in Canada’s airline industry;  • the barriers to entry and expansion that exist in the domestic industry; and  • the impediments to Canadians seeking to make informed choices for air travel.  The link to the news release is here: https://www.canada.ca/en/competition-bureau/news/2024/05/competition-bureau-to-study-competition-in-canadas-airlines-industry.html. The market study is likely based on the new powers provided by amendments to the Competition Act that took effect in December, 2023, which provides the Commissioner of Competition with the power to seek a court order compelling companies to produce volumes of documents and electronic information in support of market studies, which are intended to include in...
Read more