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Report on Business Ottawa to seek input before deciding on offshore steel tariffs

The federal government, which has been considering slapping tariffs on steel from offshore amid the trade battle with the United States, will seek input from steel companies and users of the metal before it decides whether to go ahead.

Ottawa will take comments during the next 15 days before deciding whether to put in place a “safeguard action” that would levy tariffs on imports of several types of steel, including plate, pipe, hot-rolled sheet and concrete-reinforcing bar, Finance Minister Bill Morneau said onTuesday at the ArcelorMittal Dofasco operation in Hamilton.

The World Trade Organization permits what are called “safeguard actions,” that provide temporary protection to domestic industries facing a flood of imports that might cause, or threaten to cause, serious injury to the domestic industry.

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Canada and Mexico were exempted from the initial round of U.S. tariffs on steel and aluminum in the spring, but the Trump administration then singled out its two North American free-trade agreement partners for punitive measures on May 31 in an attempt to force concessions in the talks on a new trade deal.

Steel makers in Canada sought a safeguard action by the federal government after the United States ended the exemption on Canadian metals and slapped tariffs of 25 per cent on Canadian steel and 10 per cent on Canadian aluminum effective June 1. Ottawa responded one month later with identical levies on U.S. steel and aluminum imported into Canada.

The request by the mills in Canada was to block offshore steel to prevent steel makers from other countries shipping steel through Canada to the United States as a means of avoiding U.S. tariffs. Their concern is that offshore steel can be transformed into a product or other material while in Canada that would escape the tariff when it crosses the border. A flood of cheap offshore steel would also dent the profits of Canadian mills.

A safeguard action would also demonstrate to the Americans – once the tariffs are lifted – that Canada will not be a source of a surge of offshore steel that would flow directly or indirectly into the U.S. market, one senior steel industry official said.

Steel user groups, however, warn that actions that prevent foreign steel from entering Canada could lead to job losses.

The Canadian Coalition of Construction Steel said a safeguard action on construction steel would put 60,000 jobs in the construction industry at risk “as soaring prices and shortages of construction steel cause major infrastructure and other building projects to be slowed, rescheduled or even cancelled.”

Steel mills in Canada do not have enough capacity to satisfy the demand in Canada for concrete reinforcing bar, known as rebar, and some types of steel plate that are used in construction, the group said.

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The Canadian construction industry requires about 1.2 million tonnes of rebar annually, which means companies have imported rebar from U.S. mills.

But the U.S. tariffs on Canadian steel and Canada’s retaliatory tariffs on U.S. steel have combined to severely curtail imports from the United States, the coalition said.​

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