TPT November 2018

G LOBA L MARKE T P L AC E

Zigging and zagging to counter the Trump tariffs, Canada risks sacrificing the interests of some steel users to others As US President Donald Trump’s tariffs send overseas producers in search of new markets, to protect its own steelmakers the Canadian government is considering special limits on steel imports from all countries in seven product categories. Reuters reported that construction companies are alarmed by Canada’s latest steel tariff proposal, which they warned could have an outsized impact on the country’s coasts, boosting costs in places like Vancouver – already Canada’s most expensive housing market – while protecting steel producers in the central section of the country. (“Builders on Canada’s Coasts Brace for New Steel Protections,” 4 August) The new measures could make steel more expensive in regions that depend on imports from overseas, raising the cost of large building projects as subcontractors must pay new duties on supplies like the rebar used to reinforce concrete. Canada’s response to the Trump tariffs, the safeguards would protect plants owned by Stelco, ArcelorMittal, Dofasco and others. They come on top of retaliatory duties that have made it more expensive to import US steel. “It’s baffling to me,” Reuters was told by Ron McNeil, chief executive of LMS Reinforcing Steel in British Columbia, where there is no primary steel production. “They’re trying to appease a very small group of east coast mills – there is no west coast support.” Canada’s finance department said any new measures would stabilise “the impact of steel imports, and minimize trade disruptions.” But Reuters noted it was not clear how the government can ensure shifting supply lines do not disrupt some regions. With about 1,000 employees, Mr McNeil’s company imports some 90 per cent of its rebar from Asia. The closest Canadian mill, Edmonton’s AltaSteel, supplies some of LMS’s Alberta projects, but its capacity is limited. Mr McNeil said it does not make sense to move rebar by rail from Ontario because transportation costs would be triple what they are from Asia. “The shipping cost is five times more to ship it from Quebec to Newfoundland as opposed to Turkey,” said Cory Pittman, operations manager at Allstar Rebar in St John’s, Newfoundland, on Canada’s Atlantic coast. › AJuly study commissioned by the Ottawa-based Canadian Coalition for Construction Steel estimated that tariffs on US steel would raise the average price of rebar by 6 per cent in

British Columbia and the new safeguards would add another 7 per cent, while reducing shipments. “We know that not all provinces have equal access to steel, just by their geography,” said Mary Van Buren, president of the Canadian Construction Association. “That could create a shortage of steel and then secondly could lead to price escalation.” Allegedly biased rejection of steel tariff exemptions intensifies friction between US steel mills and importers The US Commerce Department recently granted a tariff exemption to oil major Chevron for its imports of 4.5-inch Japanese steel tubes for oil exploration. But the department rejected a similar request from Borusan Mannesmann Pipe (Baytown, Texas) to exempt 4.5-inch steel pipes imported from Turkey for casing used to line new oil wells. When US President Donald Trump imposed a 25 per cent tariff on imported steel this spring, his administration allowed companies to apply for exemptions if needed metals were not available in sufficient quality, quantity, or in reasonable delivery time. According to Commerce, the department was responding to the objections of multiple US steelmakers to Borusan’s application, claiming that they could supply the product. As noted by Reuters, Chevron drew no such objections. (“US Energy Companies Fume Over Rejected Steel Tariff Exemptions,” 28 August) But a deluge of applications has overwhelmed the small staff initially assigned to the task and slowed progress. Commerce has received more than 37,000 exemption requests. But the agency had ruled on only 2,871 requests as of 20 August, approving 1,780 of the applications and denying 1,091. Separately, the department turned back more than 6,000 requests for what it called “filing errors” by applicants, who may alter and resubmit their requests. Rejected applicants have criticised the department for taking objections by domestic suppliers at face value and for not allowing importers a chance to rebut those arguments. › Commerce acknowledged its staffing issues and said it has requested permission from Congress to reallocate $5 million of its own funds to accelerate the review process. Congress has so far only approved a reallocation of $2 million, the agency said. “We will continue to run behind unless we are allowed to divert more Commerce resources to the process,” the department said in a statement to Reuters.

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NOVEMBER 2018