Canada imposes safeguards on steel imports

Canada will impose safeguards on imports of seven steel products later this month to address the diversion of foreign steel shipments to the country following the US Section 232 tariff.

The country will implement a global tariff-rate quota on imports of heavy plate, rebar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod effective 25 October, the department of finance said yesterday.

Imports that exceed historical norms based on the average import volume over the prior three years will be subject to a 25pc surtax.

The provisional measures will remain in place for 200 days while the Canadian International Trade Tribunal investigates whether or not final safeguards are warranted.

The total quota will be separated by product into four 50-day periods, with any unfilled portion of a quota at the end of a period to be rolled over into the subsequent period.

Limits will also be imposed on the share that any one country can fill for a particular product on a tariff-free basis, based on historical import volumes for that product.

The move comes as foreign steel shipments rise in the wake of disruptions in global trade resulting in part from the US 25pc tariff on imported steel effective 23 March. Canadian steel imports rose by 4pc to 3.5mn t through August from a year earlier.

Canada's rebar imports from Turkey, among the largest foreign suppliers of rebar to the US, rose by 355pc to 138,638t over the same period as Turkish producers sought to replace sales lost to the US in the wake of the tariff. Turkey's rebar exports to the US fell by 63pc to 255,850t through June.

Shipments of sheet, plate, tubes and other steel products to Canada from South Korea, India and EU member states such as Germany have also risen sharply on the year.

Several countries will be excluded from the safeguards.

Shipments from the US are already subject to a 25pc counter-tariff effective 1 July and will be exempt from the new measure.

Imports of heavy plate, rebar, hot-rolled sheet, pre-painted steel and stainless wire from Mexico do not account for a substantial share of total imports and will also be exempt. But energy tubular products and wire rod will be subject to safeguards.

Shipments from Chile, Israel and other beneficiaries of the Canada-Israel Free-Trade Agreement will be fully exempt.

Imports from developing countries will also be excluded, with the exception of rebar shipments from Vietnam.

The EU imposed similar measures in August.

Canada's department of finance also said it would exempt Canadian manufacturers on a targeted basis from reciprocal tariffs imposed on imports of steel, aluminum and other products from the US as of 1 July. Canada imposed the countermeasures after the US imposed section 232 tariffs on Canadian steel and aluminum on 1 June.

The announced measures come as trade tensions between Canada and the US have eased in the wake of the signing of the US-Mexico-Canada Agreement (USMCA). The trade pact modernizes the terms of the 25-year old North American Free Trade Agreement (Nafta).

The USMCA did not address US tariffs on steel and aluminum from Canada and Mexico as some expected, but the Trump administration said earlier this month it was in talks with the countries to replace the tariffs with quotas.

The tariffs will remain in place "until such time as we can do something that would be different, like quotas, perhaps, so that our industry is protected," US President Donald Trump said.

"[US steel producers] are hiring thousands of workers all over the country," Trump said. "I am not giving that up."