A 30 -day pause about US tariffs, and a possible commercial war .
With the materials that cross the border between the United States and Canada several times during the production of steel, plus the dependency of Canada in the American companies that buy their steel, the local industry has a lot to lose if President Donald Trump imposes the rates of 25 percent, said Goran Calic, an associated professor at McMaster University.
“We will see the very high price of this very, very quickly,” said Calic, who specializes in strategic management and is a visiting academic at Harvard Business School.
“Americans don’t even realize, and if they do, it will be fractional.”
Around half of the Canadian steel is exported and 90 percent goes to the US, while Canada’s steel represents only a quarter of what the United States imports.
Hamilton is considered a steel center in Canada, says the Federal Government’s website. The city of Ontario is home to one of the highest concentrations of steel manufacturing activity in the country and the largest flat steel producer, Dofasco Arcelormittal.
Stelco is the second largest steel company that operates in Canada and also directs a plant in Hamilton.
Ontario would also be disproportionately affected by tariffs. Six of Canada’s 13 steel plants operate in the province, says Natural Resources Canada.
The tariff threat is still coming
A last minute agreement on Monday afternoon between Trump and Prime Minister Justin Trudeau means that a probable commercial war has been temporarily avoided for at least 30 days.
Before the pause, Trump had signed an executive order that put a 25 percent tariff on all Canadian goods and a 10 percent rate on the energy of his northern neighbor. Trudeau reacted promising 25 percent in retaliation rates at $ 155 billion of American products.
Mexico also received a postponement of a similar tariff threat, while Trump’s 10 percent rates in China’s assets proceeded and entered into force on Tuesday.
If the tariffs against Canada continue in March after the 30 -day postponement has increased and there is no final plan, the cost of producing steel in key places like Hamilton would shoot, Calic said. American companies can look for cheaper options, such as steel produced in Brazil, since they increase the amount produced nationwide.
But for Canada’s siderurgical companies, it would be a “massive problem,” said François demarais of the Canadian Association of Steel Producers (CSPA).
“We cannot diversify and go to the other hand,” said Demarais, vice president of Commercial and Industrial Affairs of CSPA.
In addition to the distance between Canada and the possible European or Asian clients, and the fact that steel is heavy and, therefore, expensive to transport, there is already an overproduction of steel worldwide, he added. That means that new clients would be difficult to find.
If a commercial war occurs, Canadian steel producers will need government help to avoid dismissals, said demarais.
CPSA represents 15 companies worth $ 15 billion, says its website. They produce around 13 million tons of steel products in Canada per year, directly using 23,000 workers.
Highly integrated ‘supply chain’
Throughout steel production, materials cross the border between the United States and Canada.
It begins with components such as iron mineral, coal and coke necessary for steel production, often imported from the United States, said Demaarais.
These elements are used to make steel in places such as Arceormittal Dofasco or Stelco, both in Hamilton.
The steel is sent to the US, where it becomes components for the automotive industry, for example, said demarais. These components in turn are sent from one place to another between plants in each country as vehicles are assembled.
Although the details are still scarce, Trump’s tariffs could be applied every time these materials and components are sent to the United States, said demarais.
Canada’s automotive industry fears that 25 % of rates will have 25 percent, and some hope to see job stops and closures in vehicle and pieces manufacturers in southern Ontario.
Stelco’s owner supports rates
Cleveland Cliffs, an American company that bought Stelco last year, said in his financial update of the fourth quarter on Monday that tariffs on Canada, Mexico and China would be welcome.
“We hope to continue our work with the Trump administration on an additional rate action to come specifically to steel, against our adversaries and allies who have taken advantage of our market,” said Louranco Goncalves CEO, also president and president of Cleveland Cliffs.
“A level -level playing field will establish the basis to mark the beginning of a new golden era and a manufacturing rebirth that will make the United States strong again.”
The company has not responded to requests for comments on its plans for Stelco in Hamilton or how tariffs could affect the production there.
The largest steel producer in Hamilton, Dofafasco, refused to provide a comment.
In the long run, rates are not necessarily bad to stimulate national production, said Calic. But general tariffs of up to 25 percent could mean that there is little steel industry in Canada to obtain those benefits, he added.
