Contractors in British Columbia’s ICI construction industry are upset at a plan by the federal government to block steel dumping by imposing a new 25 per cent provisional surtax on several imported foreign steel products.
They also maintain that an arrangement to allow some companies and manufacturers to apply on a case-by-case basis to be exempt from paying surtaxes on steel, aluminum and other products imported from the U.S. until Canadian producers are able to adequately meet domestic demand is unclear and burdensome.
“The government’s goals of trying to prevent dumping of foreign steel into Canada and providing relief to the steel and aluminum users in specific circumstances are well-intended, and I think they are good goals,” Fiona Famulak, president of the Vancouver Regional Construction Association (VRCA), said in an interview. “However, the safeguards proposed will have severe ramifications on the construction industry.”
The Canadian government announced recently that as of Oct. 25, it will impose a provisional tariff of 25 per cent on steel imported from countries other than the U.S. in an effort to prevent dumping of foreign steel into Canada. The tariff will affect seven steel products, including heavy plate, concrete reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod.
The announcement comes just three months after Canada imposed tariffs on $16.6 billion worth of American goods in retaliation for hefty U.S. tariffs on Canadian steel and aluminum. The new surtax will be in place for 200 days while the Canadian International Trade Tribunal decides if longer safeguards are necessary. At the same time, the government announced targeted relief from Canadian tariffs collected on steel imported from the U.S. since July 1. The relief is available in exceptional circumstances, such as supply shortages. The exemption applies on a case-by-case basis to companies that import steel and apply for the exemption.
We have been understanding…but the outcome is that the construction industry has been ignored,
— Mary Van Buren
Canadian Construction Association
The VRCA has maintained that the tit-for-tat tariffs imposed on steel and aluminum products will only raise costs for materials and ultimately make it more expensive to build commercial structures, bridges and condos.
“Any increase in construction will ultimately go one of two ways,” Famulak said. “It could be absorbed by the contractor. If it cannot be absorbed the contractor then it will result in being covered by the consumer.”
Famulak said she met recently with VRCA members to review the recent government announcements and they are concerned about both the provisional 25 per cent surtax and the red tape and time that will be involved in applying for relief on a case-by-case basis for steel and aluminum imported from the U.S.
There also appears to be a significant amount of administrative work required to apply for relief, she said, with no guarantee of success at the end of the process.
“Given that it’s administratively burdensome and has no guarantee of success, it’s likely that few businesses will be able to pursue the process, which means that if they’re not able to pursue the process and aren’t able to secure the relief, that’s not helpful.”
Canada is a net-importer of certain types of steel, meaning the Canadian construction industry relies heavily on foreign steel to build the country’s cities and infrastructure.
Famulak said B.C.’s construction industry, particularly in the Lower Mainland, is running at close to capacity and, given the forecast for the next few years, members don’t have time to pursue an exemption policy that is unclear.
She said the VRCA, meanwhile, is supportive of an idea suggested by the Canadian Construction Association (CCA), that an estimated $300 million in tariffs that have been collected by government in the period since July 1 to the end of August be used to create a dedicated research and development fund that would bolster innovation and productivity in the industry or introduce improved tax depreciation for equipment.
“Those ideas are still on the table. We still think they are good ideas and will continue to work closely with the Canadian Construction Association to present them to government and to secure relief that way.”
The CCA maintains that the country’s construction industry is being disregarded by the federal government.
“We have been understanding while the negotiations were in progress with the U.S. government, but the outcome is that the construction industry has been ignored,” CCA president Mary Van Buren said in a statement. “Not only do the steel and aluminium tariffs remain, these safeguards are another blow to the industry.”
The CCA states the U.S.-imposed tariffs and the new safeguards on the import of foreign steel will hurt the construction industry, its workers and fundamentally all Canadians by raising prices, damaging competitiveness for business and potentially delaying projects necessary for building Canada’s infrastructure.
“Now it’s time for the Government of Canada to help the construction industry by dedicating research and development funds to improve productivity and to allow for accelerated depreciation on capital equipment,” Van Buren said.