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Canadian steel tycoon Barry Zekelman said he supports U.S. President Trump’s plans to hike tariffs on the industry.MARK FELIX/The New York Times
The Canadian steel industry and a billionaire steel tycoon are calling for an immediate crackdown from Ottawa on dumping of foreign steel into Canada to appease U.S. President Donald Trump, who has ratcheted up his trade war.
Mr. Trump on Tuesday followed through with his threat to double the tariff on steel and aluminum imports into the United States to 50 per cent from 25 per cent, a level that was already inflicting considerable damage onCanada’ssteel industry. The steeper tariff rate takes effect on Wednesday.
Michael Garcia, the chief executive officer of Algoma Steel Group Inc. ASTL-T on Monday told The Globe and Mail that, barring a massive run-up in the price of the commodity, a 50-per-cent tariff would put it out of business in the U.S.Sault Ste. Marie, Ont.-based Algomais Canada’s only remaining independent steelmaker.
In his executive order on Tuesday, Mr. Trump drew attention to foreign steelmakers that he alleges aredumping metal into the U.S. market at artificially low prices, something that he maintains imperils the country’s national security.
“The increased tariffs will more effectively counter foreign countries that continue to offload low-priced, excess steel,” Mr. Trump said.
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U.S. President Trump announced his plan to increase the tariffs last week at a steel plant in Pennsylvania.David Dermer/The Associated Press
Canadian steel billionaire Barry Zekelman in an interview on Tuesday applauded Mr. Trump for jacking up the tariffs on Canadian steelmakers, and he blamed Ottawa for bringing the problem on itself. He maintains that since the federal government is allowing a huge influx of cheap dumped foreign steel to flood the Canadian market, domestic producers are being forced to aggressively compete in the U.S. instead, and that is exacerbating the pain for the American steel sector – all of which is inflaming Mr. Trump.
“What he’s trying to do is force Canada’s hand,” said Mr. Zekelman, CEO of Zekelman Industries, in an interview. “He’s trying to say, ‘Look, guys, you haven’t fucking woken up. So, now I’m going to force you to wake up.’”
Privately-held Zekelman Industries is the largest independent steel pipe and tube manufacturer in North America, with annual sales in excess of US$5-billion. The company has 22 plants in the U.S. and a major operation in Canada.
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Business leaders have raised concerns over the damage caused by foreign steel dumping in Canada.MARK FELIX/The New York Times News Service
“I’m frustrated with the Canadian government too,” he said. “Now, they’re going to be faced with no choice. They’re faced with shutting Algoma, or shutting Stelco, or both.”
Stelco STLC-T, another big steelmaker in Canada, is owned by U.S.-based Cleveland-Cliffs Inc.
Dumping, which is selling at below the cost of production in order to gain market share, is acknowledged as a huge problem for the Canadian steel industry. Algoma’s CEO has repeatedly raised concerns that cutthroat pricing by steel mills in China, South Korea, Malaysia, India, Vietnam, the Middle East and Turkey are making it nearly impossible for his company to compete.
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Catherine Cobden, president of the Canadian Steel Producers Association, said in an interview on Wednesday that the current system in Canada of investigating dumping on a case-by-case basis takes far too long to play out. Based on ample evidence of multiple dumping infractions, tariffs should be brought against countries such as South Korea, India and Turkey, as opposed to targeting only select companies, she said. Canada has clamped down on China for its unfair steel trade practices, last year imposing a 25-per-cent tariff on steel imports from that country.
“We’re happy to compete with fair traders, but we want unfair trade out of our market,” she said.
When Mr. Trump first imposed 25-per-cent tariffs on Canadian steel imports in March, Ottawa responded by imposing reciprocal tariffs on imports of U.S. steel.
But Canada subsequently granted a tariff reprieve on some products coming from the U.S., including steel used in manufacturing and processing. Ms. Cobden said she was “stunned” that this happened and is calling on Ottawa to immediately reinstate all its original reciprocal steel tariffs, andto ramp the whole lot up to 50 per cent.
“It was an ill-advised decision,” she said of the reprieve. “They made it in the middle of caretaker mode of the government, no consultation or anything else, and it had dramatic consequences. The market was starting to pivot towards domestic steel, away from the U.S. and we lost that opportunity.”
Mr. Zekelman is also critical of Prime Minister MarkCarney’s tactic of aggressively standing up to the U.S. in this trade war, considering thatCanada is a much smaller player and has far less leverage than the U.S.
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“He wants to put his elbows up against Donald Trump,” said Mr. Zekelman.
“All right, knock it off. Get in line with the U.S. and be good trading partners and friends and have a North American fortress of trade against all of the other bad actors in the world.”
Mr. Zekelman was born in Windsor, Ont., and took over Zekelman Industries in 1986 after the death of his father. He says he doesn’t feel the least bit conflicted as a Canadian coming out in favour of Mr. Trump, an American who has caused huge anxiety for millions of Canadians and inflicted untold damage on its export sector. He cites the company’s operations in Canada, the amount of people he employs, taxes paid and work done for various communities.
“If someone said to me that I’m anti-Canadian, I’ve done more for Canada than 99.99 per cent of the people in Canada,” he said.
