Canada to target steel originating from China with new tariffs
Canada to target steel originating from China with new tariffs
OTTAWA - Canada is moving to shore up its domestic steel industry amid U.S. President Donald Trump's ongoing global trade war, with new tariffs targeting China and other countries around
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Those include a new 25 per cent tariff on all steel products that contain metal melted and poured in China by the end of the month.
Canada will also impose import quotas based on how much steel was imported from each country in 2024, with countries that don't have a free-trade agreement with Canada already in place impacted more than those that do.
Imports that exceed these quotas will be charged a 50 per cent tariff rate.
Carney said Canada's steel industry will be among the most impacted by the ongoing global rearrangement of markets because it is one of the most open in the world for steel and the industry must be protected.
"Imports supply almost two-thirds of current Canadian consumption of steel, compared to less than one-third for the United States and less than one-sixth for the European Union," Carney said.
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The prime minister said Canada must rely more on "Canadian steel, for Canadian projects."
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I'm out of my element here. To what extent is there non-tRump precedent for this and to what extent does this read as Carney has adopted a play from tRump's playbook?
Tariffs are used by countries very commonly and isn’t a Turnip original (yeah I spell his name however I’m feeling like).
The reason why tariffs are used is generally to protect a local industry, typically one that’s weak, either because they’ve fallen behind, or that it’s a new budding industry and fierce competition will just obliterate its chances of even growing.
Think of, say, our EV sector, which is essentially in its infancy. Sectors like these tend to have higher prices on their products because they’ve not reached a critical point and can enjoy the benefits of economies at scale, where they’ve can operate efficiently while mass producing their products; they’re still trying to figure out what works and works well, and so their stocks are limited, which usually means that their means of production is also not as efficient as an established company or sector. Now imagine if we don’t have tariffs against Chinese EVs, which is a mature Chinese industry at this point, and still enjoys massive government benefits to subsidize a lot of its production processes, i.e. their costs are low and they can sell their EVs for cheap. Imagine them just exporting a bunch of EVs to Canada. Without tariffs inflating their prices, most people would probably just buy Chinese EVs cause, well, that’s the economic thing to do individually in these unstable times. Our local EV companies would easily be beaten by cheaper Chinese rivals, especially when our own quality is not even close to competing with Chinese standards, i.e. they can’t make enough of revenue to cover their business operations and ongoing developments, and so the local industry would either die off because people may be discouraged to work in that sector, or it’ll take forever to grow.
If you look around what other sane countries are doing, you’ll see that a lot of them have some level of tariffs in various industries levied against enemies and allies alike, because, well, you, as the government, generally have an incentive to protect your local industries, or people would have a hard time finding jobs and earning money, and if they can’t do that for a long enough, you can kiss your government seat goodbye.
I’m adding this as a sub comment cause I think this would be extra points, but I guess it might be interesting for some, if they’ve never really read or thought about it.
But do first note that I’m no expert of governments or foreign trade relations. I’m just an observer.
You might be wondering if tariffs is the only way for governments to protect local industries, and you’re most probably thinking that that shouldn’t be the case. And you’re right. That said though, keep in mind that a tariff is a pretty simple tool for governments to use, and fairly good too: you fork out some money upfront to set up the tariff and all its supporting processes, and you get to earn money for the country. What actually happens is that you’ll tax any imports on the exporter, but what ends up happening is that exporters just add that to their cost and thus increase their prices, so it is typically like a tax on your own citizens. There are exporters who do just sort of eat that cost themselves, but that’s not common afaik.
Another option you could support a local industry is by providing subsidies, which can be done in a myriad of ways: materials, procurement, research, labour, etc, and you can even mix and match some of them. The problem here, though, is that the government has to fork out that money — that’s why it’s a subsidy. The Chinese government loves doing this for any industry that they deem strategic, and they can do so a lot more freely than most democratic countries, because, well, they just don’t have to worry about an election if people aren’t happy with where the investment went. Here in Canada though, people do get mad when subsidies are offered for industries that they don’t like, and that affects the polls.
You could also outright ban the import of certain products from certain countries, but that usually triggers very negative reactions from the affected countries, unless you have a clear law that literally bans the consumption or use of that product; people want to make money after all, and you’re literally making it impossible to do so. Examples of “okay” bans that most countries have over Canada are like cannabis, cause that’s deemed illegal in their country, and Canada doesn’t really have the desire to make those exports. It’s definitely a strong tool though, with potentially negative consequences.
I wouldn't say this is adopted from the Florida man's playbook, although it may look so at first sight.
As Mr. Carney says, two-thirds of the steel consumed in Canada comes from abroad (with a large part from China). In the U.S. this rate is one-third, in the EU one sixth. This makes Canada dependent on foreign suppliers.
International trade is fine if everyone plays by the rule of law. If not -which is arguably the case in the predictable future- this dependency puts your economy at a higher risk, and it may make you vulnerable to coercive political measures which we have been observing exactly by countries like China. So protecting your own industry and collaborate with those countries with whom you have a free trade agreement could be a good move.
But that's just my interpretation. Maybe I am wrong.
To what extent is there non-tRump precedent for this
If you're asking about steel spcifically I don't know, but our countries have had tariffs against each other for a long time (off the top of my head, Canada on Chinese EVs, China on canola)