Trump’s Metal Tariffs Impects Corporate Canada

To get a sense of the disbelief gripping Canadian manufacturers since the U.S. imposed metal import tariffs, have a chat with Marc Dutil.

“I just want to scream,” the chief executive officer of structural-steel maker Canam Group Inc. said Friday by phone. “All this is doing is creating uncertainty. It’s the last thing we needed.”

Canam, ironically, is bidding for work on the Gordie Howe International Bridge, the new structure planned to connect Detroit and Windsor, Ontario.

“In theory, the bridge is supposed to stand for the close relationship between our two countries,” Dutil said. “It’s supposed to be built with North American steel, but that steel will be taxed. I can’t see how that will help the economy.”

The span would be built in a corridor that carries $100 billion in commerce annually, according to owners of the existing Ambassador Bridge, a figure just shy of U.S. trade with all of the U.K.

‘Troubling Development’

On Thursday, Commerce Secretary Wilbur Ross said the U.S. would levy new duties on metal imports from Canada, the European Union and Mexico, ending temporary exemptions. The levies of 10 percent on aluminum and 25 percent on steel, which are predicated on national security considerations, sent Canadian producers of everything from oil to farm equipment reeling.

The tariffs are a “troubling development” that will affect every part of the oil and gas industry, said Nick Schultz, vice-president of pipeline regulation and general counsel at the Canadian Association of Petroleum Producers.

“These imposed tariffs on steel imports will add a significant cost burden to the industry on both sides of the border,” Schultz said in an emailed statement.

Farm-equipment makers are “very concerned” as the tariffs will immediately increase the cost of goods, said Leah Olson, president of the Agricultural Manufacturers of Canada, an industry group with 300 members. Virtually every piece of equipment for grain bins or livestock handling has steel or aluminum in it. The supply-chain is extremely integrated as many Canadian firms import metal from the U.S. that they later re-export to the U.S. as a finished product, she said.

‘Bit Scary’

Canada exported about C$1.9 billion ($1.5 billion) worth of agricultural equipment to 150 countries in 2017, with as much as 80 percent going to the U.S.

“I don’t think anybody would’ve expected putting tariffs and counter-tariffs on any goods crossing the Canada and U.S. border,” Olson said by telephone. “To be honest, it’s a bit scary.”

Multinationals including Montreal-based plane and train maker Bombardier Inc. — which has plants in both countries — and London-based aluminum maker Rio Tinto Group are studying the tariffs.

Rio says it sends about 1.4 million metric tons of aluminum to the U.S. each year from its Canadian operations, making it the biggest supplier of the metal to the country. “At this stage, we are reviewing the U.S. action and remain focused on reliably supplying our customers in North America,” a Rio spokeswoman said Friday.

Auto Impact

Rob Wildeboer, chairman of Martinrea International Inc., said the tariffs don’t have much impact on his auto-parts business because its plants tend to buy steel in the same country where it’s produced. However, he said it’s bad for the industry.

“The U.S. administration position is not helping the industry they profess to be looking out for,” Wildeboer said in an email.

Quebec steel-structures maker ADF Group Inc. says it’s too early to estimate financial repercussions of a trade war. But the company’s prospects are now harder to predict, says Chief Financial Officer Jean-Francois Boursier.

“Everyone we talk to is a bit nervous,” Boursier said by phone. “Customers are asking a lot of questions, and there are some we simply cannot answer. This doesn’t exactly help for signing contracts.”

While the company — which helped build the spire at the top of Manhattan’s Freedom Tower — has a plant in Montana, it does most of its production out of its main factory near Montreal. ADF employs about 600, including about 400 in Canada, and gets about 90 percent of its revenue from the U.S.

All of which means the U.S. tariffs, and the retaliatory Canadian response, have sent ADF’s usual business complexities to a whole new level.

“Business is never easy at the best of times, but we certainly didn’t need this,” Boursier said.


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