What you need to know about U.S. tariffs on steel and aluminum set for Wednesday

OTTAWA — Industries that rely on steel and aluminum products are bracing for a fresh wave of tariffs set to kick in Wednesday.

U.S. Commerce Secretary Howard Lutnick said Sunday that President Donald Trump will follow through on his threat to impose 25 per cent tariffs on steel and aluminum imports into the U.S. starting Wednesday.

Here’s what you need to know before those tariffs are officially implemented.

Are these tariffs related to the ones delayed last week?

The steel and aluminum tariffs are separate from the widespread tariffs that have garnered most of the headlines amid Trump’s trade war with Canada and Mexico.

Last week, those 25 per cent across-the-board tariffs, with a lower 10 per cent levy on Canadian energy and potash, briefly went into effect before Trump signed an executive order Thursday partly delaying them. Lutnick said those tariffs will be revisited next month.

Meanwhile, a different executive order signed by Trump on Feb. 10 set the stage for 25 per cent tariffs on steel and aluminum imports to the U.S. beginning March 12.

Significant trade implications

Analysts and economists say Wednesday’s tariffs will likely be felt profoundly by affected industries. A report by law firm Gowling WLG said Canadian steel supports key U.S. industries, including defence, shipbuilding, and auto manufacturing.

It said Canada exports 10 million tonnes of steel to the U.S. annually, supporting 23,000 Canadian jobs. Data from the U.S. National Trade Administration shows the U.S. is Canada’s largest market for aluminum, with over three million tonnes exported to the U.S. last year.

BMO economist Robert Kavcic has said Canada’s total steel and aluminum exports to the U.S. last year amounted to $35 billion, or roughly one per cent of GDP.

Canadian exports of both products to the U.S. fell sharply during Trump’s first term, when he imposed a 25 per cent tariff on steel imports and a 10 per cent tariff on aluminum imports from Canada.

Canadian steel exports fell 38 per cent in June 2018, and by May 2019 were at their lowest level in almost 10 years, according to Statistics Canada. Aluminum exports were on average 19 per cent lower during the year the tariffs were in place, compared with 2017.

Industries make their case

Canadian Manufacturers and Exporters president and CEO Dennis Darby said Canada and the U.S. “are basically one market” when it comes to steel and aluminum manufacturing

“We don’t have separate steel and aluminum industries in North America,” Darby said by phone Monday from Washington, D.C., where he and other Canadian industry leaders were set to meet with U.S. Senate and congressional representatives to make their case against the latest round of tariffs.

“It feels like a rerun of a bad movie.”

He said the steel and aluminum tariffs will affect equipment key to the auto and agricultural sectors, along with construction materials, the aerospace industry, and other appliances and machinery.

“Steel and aluminum are both incredibly critical materials that go into so many components and so many products,” said Darby.

“The list is pretty long.”

Tariffs would be stacked

While uncertainty continues to linger over the delayed across-the-board tariffs, the White House has said neither those, nor the steel and aluminum tariffs, would cancel each other out when applied.

Rather, the planned 25 per cent tariffs on steel and aluminum imports would be stacked on top of other levies on Canadian goods, an official confirmed last month.

It would mean a total 50 per cent tariff on Canadian steel and aluminum, if the delayed measures eventually proceed.

How Canada is responding

Canada’s countermeasures against the steel and aluminum tariffs are part of its overall response to Trump’s trade war.

Last week, Canada imposed 25 per cent tariffs on $30 billion in goods imported from the U.S., includes products such as orange juice, peanut butter, wine, spirits, beer, coffee, appliances, apparel, footwear, motorcycles, cosmetics, and certain pulp and paper products.

Government officials have signalled that despite Trump’s month-long pause on universal tariffs, Canada won’t lift its retaliatory tariffs until the U.S. president completely backs down from his trade war.

Ottawa said that “should the U.S. continue to apply unjustified tariffs on Canada,” it would impose a levy on an additional $125 billion of goods from the U.S., including steel and aluminum, along with electric vehicles, fruits and vegetables, beef, pork, dairy, electronics, trucks, and buses.