Canada Eyes New Quotas, Tariffs to Halt Flood of Diverted Steel

(Bloomberg) -- Canada is considering both quotas and tariffs to stop a spike in imports of foreign steel being diverted from the U.S. by Donald Trump’s trade policies, the industry minister said.

Navdeep Bains, speaking by phone from the Farnborough International Airshow, said Justin Trudeau’s government is weighing so-called safeguard measures to curb the influx of cheap foreign steel and could expand the list of products as needed. It previously identified three -- energy tubular, steel plates and rebar -- but the minister said that was only a first step.

“We did that based on the data and the information that we have” Bains said Monday. “That by no means is the final list so we’ll look at what option, either tariff or quotas, that we need.”

Canada is among the countries on the front lines of Trump’s trade fight, having imposed retaliatory tariffs on C$16.6 billion ($12.6 billion) worth of American goods after the U.S. imposed levies of 25 percent and 10 percent on steel and aluminum, respectively. Canada is the top source of U.S. imports of both metals, and the world’s top buyer of U.S. goods. The northern nation has already taken steps to choke off any steel sneaking in for “transshipment” to the U.S., and safeguard quotas or tariffs would be the next step in that.

Bains said the initial three products were selected as a “demonstration of our understanding” of what was happening in the market already. Rebar, for instance, is used in residential construction, where some are warning the tariff fight could increase condo prices. The minister said he’s in talks with the steel sector on next steps and didn’t specify when any measures would be imposed.

Industry is pushing the government to move more quickly, and on more products. “We believe the government should be taking immediate and strong action and we believe the initial initiation of the safeguard should be fairly broad in scope,” Joseph Galimberti, president of the Canadian Steel Producers Association, said in a phone interview. In addition to the three products already identified, he said the government should add hot rolled sheet, pre-paint and wire rod.

Aerospace Expectations

Bains, meanwhile, is at Farnborough to pitch Canada’s aerospace sector -- in particular Airbus SE’s A220, which was developed by Montreal-based Bombardier Inc. and formerly known as the C Series.

The minister said he’s proud of the investment the federal government made in the project, which was handed over to the European giant at the beginning of the month, and signaled he expected more sales to be announced soon. “The overall response has been very positive and I’m confident that we’ll hear good news in the coming days,” he said.

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