- Canada is considering a new restrictions on steel imports, including targeted quotas and tariffs.
- The move would be an attempt to stem the flow of cheap foreign steel, mainly from China, into Canada.
- The amount of foreign steel headed to Canada is expected to increase as a result of President Donald Trump’s steel tariffs.
- The move is another example of the fallout from Trump’s trade restrictions.
The Canadian government is considering a steel tariff of their own, a measure that would attempt to mitigate fallout from US President Donald Trump’s trade crackdown.
According to Bloomberg, Canadian leaders are mulling a quota – or limit on the amount of a good that can be imported in a year – on steel imports from certain countries such as China. In the event the country exceeds the quota, Bloomberg said, any additional steel would be subject to a tariff – an additional tax as the metal comes into Canada.
The measure would be designed to stem the tide of steel imported to Canada in an attempt to reroute metal that originally intended for the US.
Given the US restrictions on steel imports, Canadian steel companies are worried that Chinese steel producers could attempt to flood the Canadian market instead and undercut domestic producers.
Such a safeguard move would be the next domino to fall as a reaction to Trump’s tariffs on steel and aluminium. Canada already slapped just over $US12 billion worth of US goods with tariffs as a reply, and other allies like the European Union are doing the same.
But a broader Canadian move would represent an example of the second-order distortions created by Trump’s trade crackdown. The EU is also considering similar measures to try to avoid a flood of steel into their market.
But such a measure would carry the same downsides for Canadian firms as Trump’s move does for the US. The cost of steel would likely increase, pushing up costs for companies that use steel as a part of their finished good. In turn, this would likely increases prices for consumers of those goods and possibly result in a drag on the Canadian economy.
According to Bloomberg, the measure could be introduced as soon as next week, but details are not finalised. A spokesperson for Canadian Finance Minister Bill Morneau declined to comment.