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Prime Minister Mark Carney on Parliament Hill in Ottawa on Wednesday. Mr. Carney has announced further limits on imports of steel in an effort to boost domestic demand.Adrian Wyld/The Canadian Press
The federal government is ramping up support for Canada’s steel and lumber industries, increasing tariffs on steel imports and promising additional money to help lumber mills stay afloat in the face of U.S. protectionism.
Prime Minister Mark Carney announced on Wednesday further limits on imports of steel in an effort to boost domestic demand for Canadian mills that have lost access to their key export market in the United States.
Over the summer, Ottawa introduced tariff-rate quotas (TRQs) for steel imports, setting a threshold above which imported metal will face a 50-per-cent tariff. The idea is to cap the amount of steel coming to the country, without cutting it off entirely.
Carney expected to announce support measures for steel industry hit by U.S. tariffs
Starting next month, Canada will tighten these TRQs. For countries that don’t have a free-trade agreement with Canada, the quota will be lowered to 20 per cent of 2024 levels. For countries that have a free-trade agreement with Canada, the quota will be set at 75 per cent of 2024 levels.
These TRQs don’t apply to the United States or Mexico, although Canada maintains a separate 25-per-cent tariff on steel imports from the United States.
The Canadian steel industry has spent months calling for increased protection, as exports to the U.S. have plummeted in the face of 50-per-cent tariffs imposed by President Donald Trump. If Canadian mills can’t compete in the U.S. because of tariffs, the industry argument goes, then Ottawa should erect its own tariff walls to increase the use of Canadian metal within the country.
In October, Mr. Carney and Mr. Trump had been in discussions to lower steel and aluminum tariffs. However these talks broke off, after Mr. Trump became angry about an anti-protectionist TV ad made by the government of Ontario, featuring the late U.S. president Ronald Reagan.
Alongside tighter tariff-rate-quotas, Mr. Carney announced a 25-per-cent global tariff on imports of some “targeted” steel derivative products, that will apply to products such as wind towers, prefabricated buildings, fasteners and wires.
And in an attempt to lower the cost of Canadian products for domestic buyers, Ottawa said it will subsidize the cost of shipping steel and lumber across the country by rail by up to 50 per cent. This appears to be in response to complaints by Western politicians and developers that steel coming from mills in Ontario is much more expensive than imports brought in by ship, given the higher rail transportation costs.
Mr. Carney also announced a suite of measures to help the lumber industry, which is struggling with a combination of rising U.S. anti-dumping and countervailing duties, as part of the longstanding softwood lumber dispute, and a new round of separate U.S. tariffs. Together, this has taken U.S. import taxes on most Canadian softwood producers to more than 45 per cent.
The announcement includes an extra $500-million in loan guarantees to help Canadian producers of softwood lumber with their operations, coming on top of $700-million previously allotted in August.
This is intended to help lumber mills remain solvent while they search out new markets or retool for the domestic market.
So far, promised financial support from Ottawa has been slow to materialize. Tim Hodgson, the federal Energy and Natural Resources Minister, met on Monday with senior banking executives after the forestry industry complained that businesses have yet to receive the loans. The program is run by the Business Development Bank of Canada but the loans are distributed through the commercial banking system.
On Wednesday, Ottawa said it would establish a “single window” for applications to make it easier for forestry companies to apply for the loans.
Mr. Carney also spelled out new support for workers in industries that have been affected by tariffs. Ottawa is earmarking an additional $100-million over two years for a work-sharing program. If companies reduce their employee hours but do not lay them off, they can use unemployment insurance to make up the difference.
