WARMINGTON: Trump targets steel and aluminum in trade war with Canada

Article content

The trade war between the United States and Canada officially started with a stroke of President Donald Trump’s pen at around 6 p.m. on Monday.

This comes just a week into a promised 30-day pause on a blanket 25% tariff on Canadian goods. Trump aggressively applied a 25% tariff to Canadian-made steel and aluminum, effective March 4.

But while these trade war shots may be aimed at Canada, there are many shaking their heads because both countries will end up dealing with financial and business carnage.

A major problem with Trump placing a 25% tariff on Canadian steel is a majority of that product is also American steel. It’s produced by both countries together. Not just in the materials it’s made from, but in many cases, the ownership of the plants which make it.

Hamilton’s Stelco is a good example. It’s owned by Ohio’s Cleveland Cliffs Inc.

Sault Ste. Marie’s Algoma Steel, owned by Legato Merger Corp. based in New York City, is another.

“The Canada-U.S. economy is so highly integrated; with $20 billion in trade of steel between our two countries, 40% of Canada’s steel imports comes from the United States,” said Catherine Cobden, president and CEO of the Canadian Steel Producers Association.

It means there is nothing straight forward about these business models or the production of the products. Yet, Trump on Air Force One — on the way to the Super Bowl in New Orleans Sunday — told reporters he would slap a 25% tariff on steel from Canada and Mexico into the United States.

While he delayed it several times during the day, he made good on the promise as the sun went down.

“Any steel coming into the United States is going to have a 25% tariff,” he told reporters Sunday, adding aluminum would also be hit with “trade penalties.”

In the Oval Office, he signed an executive order making it official.

Much of the steel heading south comes from Ontario, while a majority of the aluminum comes from Quebec.

While the past two weeks have been surreal with Trump’s talk of making Canada a “cherished 51st state,” and that it is not “viable” as a country without the United States, the real truth of what’s happening will be felt by Canadian businesses, investors, workers and customers.

This is a nightmare for the Canadian economy.

“We can’t absorb the whole cost of what these tariffs will do so there will have to be price increases,” said Byron Nelson, president and founder of Scarborough’s Leland Industries, which — for 40 years — has made steel fasteners, nuts, bolts and many other products.

Recommended video

We apologize, but this video has failed to load.

Try refreshing your browser, or
tap here to see other videos from our team.

Play Video

That’s going to create major problems for suppliers who ship products south. He uses all Canadian steel, butt “55% of my customers are in the United States.”

Needless to say, he will have to fight to keep his operation running and keep his 240 employees working.

“In business, you always run into the unexpected,” he said.

And sometimes the unnecessary.

“The real issue is not Canada and the U.S. but China,” said Nelson. “That’s where the trade imbalance really is.”

With the integration between Canada and the United States of steel and their needs for aluminum, he said there will be hardship for companies on both sides of the border.

Cobden agreed, saying she has seen this movie before – not just in the past few weeks since Trump was sworn into office a second time, but also several years ago during his first term.

“When President Trump implemented tariffs on Canadian steel in 2018, we saw massive disruptions and harm on both sides of the border, hurting both America and Canada,” she said.

This is the irony and something Canadian politicians have not been able to get through to the president. And this is why the Canadian side is talking stiff retaliatory tariffs in response.

“While the target of Canadian steel and aluminum is completely baseless and unwarranted, we must retaliate immediately,” said Cobden. “We are urgently demanding that the Government of Canada act again with resolve and purpose to combat this threat and ensure any measure taken against our sector is met with retaliatory measures and action to offset the devastating impacts tariffs would have on our sector and our workers.”

From Prime Minister Justin Trudeau to Premier Doug Ford, this is what they plan to do.

But Toronto Councillor Brad Bradford took a different approach by putting forward a motion which calls for city council on Tuesday to “offer urgent relief to nearly 3,500 industrial businesses across the city by providing an immediate 25% property tax reduction, an average savings of more than $10,000 per business. “

Said Bradford: “Workers and business leaders are worried, and they deserve more than words of encouragement – they deserve action. That is why I am asking my fellow councillors and the mayor to stand with me (on Tuesday) and take real action to protect Toronto jobs.”

Nelson said he appreciates what Bradford is doing, saying “it all helps.”

It’s constructive and problem-solving — unlike Trudeau who is hamming it up at an AI conference with President Emmanuel Macron in France, or MP Chrystia Freeland and NDP Leader Jagmeet Singh who issue threats without any authority to implement them.

The best advice would be for the politicians to get back from the Arctic or Paris or the campaign trail, recall Parliament and the legislature, and get back to work with all hands on deck to address a problem that could destroy the Canadian and American economies.

No one should forget that while Canada has 13 steel plants, China has several hundred that don’t have to follow as strict environmental rules. If, thanks to tariffs, the steel Canada makes with materials from American mines becomes too expensive to produce and get to market, take a guess who will come in and fill that void?