MNI INTERVIEW:US-Canada Deal Must Drop 232 Tariffs-Steelmakers

Prime Minister Mark Carney must avoid signing a trade deal that keeps U.S. national security tariffs while President Donald Trump should drop 50% steel levies because they boost costs without tackling overcapacity in places like China, the head of Canada's steelmaking association said.

“The way out from our perspective is Canada cannot sign a bad deal, and a bad deal for us would be if the 232 tariff regime isn’t resolved,” Catherine Cobden, president of the Canadian Steel Producers Association, said Thursday after parliamentary testimony. The 232 tariffs have also been imposed on Canada's aluminum and auto makers. 

Both national leaders says it's unlikely a July 1 deadline to renew the USMCA pact will be met and Trump said that's better because that move triggers annual reviews over the next decade. Carney has not publicly pushed for a fast deal saying most exporters still deliver tariff free, and at times he's suggested the U.S. is determined that some tariffs remain.

“We can’t let our 232 sectors down, we’re very significant across the economy, it’s not just steel as you know it’s aluminum, it’s autos,” Cobden said. Canadian steel exports to the U.S. have fallen by more than half since the new tariffs, forcing layoffs and canceled investments, she said. (See: MNI INTERVIEW: BOC Holds With Broader US Tariff-Senator Gignac)

NO FATHOMABLE WAY

U.S. tariffs are hurting its own economy, not just Canada's, Cobden said, citing a 40% rise in American prices for hot rolled coil steel. Canada was the largest shipper of steel to the United States, filling in some of the 26 million tons a year America imported.

"There’s no fathomable way that they can build 26 million tons of steel in a year, even five years or ten years,” Cobden said. 

“What we therefore see is a significant escalation of pricing in the United States, which is not happening in Canada,” she said. “That’s the side of the story you don’t hear too often in the United States.”

The U.S., Canada and Mexico are better off cooperating to tackle global overcapacity, Cobden said, something the trade war is preventing. “My hope is that’s the long game, we will get back to that and once again find our way back to North American countries fighting against a formidable challenge in steel overcapacity.”

Carney told reporters Thursday “we are going to get a deal that’s right for Canadians,” and “there’s tremendous advantage to keep integration in certain sectors.” These include steel, aluminum, autos, and forestry, he said, “but we’ve got work to do to convince the U.S. side of that.”