Canadian steel producers stand to benefit from recent administrations’ moves to restrict imports of steel, as tariffs on American steelmakers approved last week come into effect.
This also supports the Canadians’ development of “green steel” based on green technologies, the Canadian Steel Institute says.
So far, the U.S. Commerce Department’s decision to impose tariffs of 25 percent on imported steel and 10 percent on aluminum from Canada, Mexico and the European Union has not adversely affected Canadian producers, as most of their products are shipped into the U.S. market and tariff rates have not been set yet.
Canada is the biggest single buyer of U.S. steel, accounting for 31 percent of total sales. Most Canadian steel is shipped to the U.S. and some is shipped into the Canadian market.
Some 800,000 Canadian jobs are linked to steel and aluminum, analysts say.
At the Federal Economic Development Agency of Ontario, the focus is on global demand to increase “environmentally friendly” steel. Among its strategies is to invest $300 million in new green steel production facilities to support a shift to environmentally friendly production and reduce carbon emissions.
Over the next decade, it hopes to grow its market share in the metals sector to 8 percent, up from 5 percent, Reuters reported.
The agency is focusing on three reasons to support “green steel”: environmental sustainability, economic viability and job creation.
Regulatory reform is another. In the first few months since new auto-import tariffs were imposed in response to U.S. steel import duties, Canada and the EU agreed to reforms that should reduce the cost of import duties.
To decrease market costs, Canadian auto producers will be able to set up shop in the EU, rather than importing vehicles into the U.S. without trade exemptions.
Leading the party is Ford Motor Co. It will be allowed to import up to 5 million Canadian vehicles per year tax-free and up to 8.8 million from a range of other countries from March 20.
Analysts say the deal will give Canada a “double effect” that includes increased demand for its cars.
A similar price advantage exists for Canadian light vehicles. Canadian Prime Minister Justin Trudeau has pledged that an exemption on steel and aluminum tariff will extend to future programs for export-import vehicles.
In a joint statement on March 19, the U.S., Canada and Mexico agreed to drop tariffs on imports of finished vehicles and auto parts, but only until July 1, 2020.
Canadian exports of automotive parts were worth $29.1 billion in 2016, according to Statistics Canada. Exports of finished vehicles were worth $85.4 billion.
The agreement on temporary tariffs signed last month is a first step towards lowering trade barriers to “green steel” production, according to OSD and Canadian Steel Institute.
The government has promised to examine the potential environmental benefits of moving to “green steel” manufacturing.
“Wider use of green steel is a great example of the kind of innovation the federal government sees to encourage,” said Ron Stoffer, a spokesman for the department.
The International Steel Statistics Bureau reported in January that global production of green steel stood at 1.9 million metric tons in 2017, up 33 percent from the previous year. The industry generates more than 500,000 jobs worldwide.
Last week, the German press reported that steelmakers in Europe planned to launch a petition to end trade tariffs on U.S. exports of steel. They call steel tariffs a risk to global trade.
The makers of steel, particularly in Europe, worry the U.S. will impose so-called “zero tariff” deals that would permanently eliminate tariffs on steel.
German steel group Voestalpine fears this could lead to steel being “lost in the marketplace,” in the worst-case scenario, the Tagesspiegel newspaper reported.
This “would put steel mills in trouble at a global level,” Herbert J. Kalfus, Voestalpine’s head of corporate affairs, said.
Dow Jones Newswires contributed to this report.