Canada Finalizes Moves on U.S. Goods, Vows Aid for Workers

(Bloomberg) -- Canada finalized tariffs of American goods and pledged support for companies and workers hurt by U.S. levies on Canadian steel and aluminum exports, as one steel company announced layoffs it blamed on the U.S. actions.

Foreign Minister Chrystia Freeland announced final measures Friday on C$16.6 billion ($12.6 billion) of U.S. products to take effect Sunday, Canada’s July 1 national holiday. Some items, including beer kegs, mustard and certain jams, were removed from the final list.

The tariffs from Prime Minister Justin Trudeau’s government mirror the value of those imposed by President Donald Trump’s administration. Canada will apply a 25 percent tariff on steel products, and 10 percent on aluminum and consumer goods. The levies will remain in effect until the U.S. eliminates its tariffs on Canadian steel and aluminum.

“We will not escalate, and we will not back down,” Freeland told reporters at a steel mill in Hamilton, Ontario. “We are acting in very close collaboration with our like-minded partners in the European Union and Mexico.” She also reiterated the U.S. measures are “illegal” and America has a trade surplus with Canada on iron and steel.

Canada will provide as much as C$2 billion in assistance for affected workers, including plans to expand a work-sharing program and enhancements to a corporate innovation fund, similar to steps the government took to cushion the impact of a softwood lumber spat.

On Friday, steel pipe maker Tenaris SA said it would temporarily lay off 40 workers at its Tenaris Algoma Tubes facility in Sault Ste. Marie, Ontario, across the border from the northern Michigan city of the same name.

“The implementation of a tariff has created an unsustainable market to serve our U.S. customers,” Tenaris spokesman said David McHattie said in a statement reported by local media. “The market outlook remains uncertain as we continue to understand the full-scale impact of cross-border tariffs and due to the increase in imports to Canada from countries that have also lost the U.S. market.”

Quotas Coming?

In that vein, Canada is said to be preparing a further set of quotas and tariffs on steel from other countries, to prevent dumping or diversion after the U.S. tariffs kicked in. Innovation Minister Navdeep Bains said Friday that he’ll act soon on that, while declining to provide details of how it would work.

The tariff response is the latest development in an escalating spat between the two countries, which trade more than $500 billion in goods annually. The U.S. and Canada are also in talks to update the North American Free Trade Agreement, which includes Mexico.

The Americans have applied tariffs to Canadian softwood lumber, and are threatening to do so on autos. The latter move is seen as a major threat to Canadian growth and to the North American auto sector, since U.S. carmakers rely heavily on supply chains that include its two neighbors.

--With assistance from Maciej Onoszko.

To contact the reporters on this story: Josh Wingrove in Ottawa at jwingrove4@bloomberg.net;Greg Quinn in Ottawa at gquinn1@bloomberg.net

To contact the editors responsible for this story: Theophilos Argitis at targitis@bloomberg.net, Chris Fournier, Stephen Wicary

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