Canadian steel and aluminum businesses are already feeling the consequences — and the déjà vu — of Donald Trump’s latest tariff threat, several years after he targeted the same industries with a punishing import tax.
The U.S. president mused on Sunday that he would slap a 25 per cent tariff on steel and aluminum imports from all countries — including Canada, only one week after this country temporarily staved off the crisis of a blanket tax on all exports to its largest trading partner.
“It’s extremely worrisome. It’s difficult to peg an exact monetary value on it. I would say at this point I think we’ve already expected a 25 per cent drop in sales from orders that have fallen through,” said Rahim Moloo, managing director and owner of Conquest Steel, a steel manufacturer and distributor based in Toronto.
The threat is already impacting his business, said Moloo, with a handful of U.S. distributors cancelling their purchase orders and leaving the company with a significant amount of inventory. Some Canadian distributors, meanwhile, have decided to stop shipping to the U.S. amid the ongoing uncertainty.
Conquest Steel was in the midst of expanding into the U.S. market; it kept its manufacturing facility in Canada to support domestic job creation and the economy. “That’s a decision that’s coming back to bite us a little right now,” Moloo said.
“I’m predicting that the amount of business that we’ll end up losing and the impact on our business will only increase as the days go along unless we’re able to find some creative solutions to manage it.”
‘Everything’s on hold’
Back in 2018, Trump imposed a 25 per cent tariff on steel and a 10 per cent tariff on aluminum from its free trade partners Canada and Mexico as well as other countries. Canada and Mexico struck back with their own tariffs, all of which were lifted after the Canada-U.S.-Mexico Agreement (CUSMA) was negotiated and signed, replacing NAFTA.
The 2018 tariffs targeted about $16.6 billion worth of Canadian steel exports and $9 billion of aluminum exports. After they were imposed, steel exports dropped nearly 40 per cent, and aluminum by more than half. The costs of those tariffs were largely passed down to steel and aluminum-consuming business and consumers in the U.S.
Ryan Jordan, president of RJ Steel in Windsor, Ont., said the 2018 tariffs forced his business to diversify its revenue streams. But with the most recent tariff threats looming over the industry, he anticipates that he’ll be making calls to U.S. customers soon to weigh how the tariffs will impact their orders.
“I believe that it will be difficult with the larger jobs that we have ongoing. There are contracts that we have already, jobs coming up, that we did not implement these tariffs to,” he said. “In other words, there may be a situation where I need to reach out to a customer and speak to that.”
