Canada’s steel and aluminum industries are raising urgent concerns over what they perceive as an “existential threat,” calling on the federal government to join forces with the United States and Mexico in imposing tariffs on Chinese steel and aluminum to combat market dumping. There are fears that Canada could potentially serve as a channel for Chinese products to bypass American and Mexican tariffs.
Canada’s primary aluminum production is centered around eight smelters in Quebec and one in Kitimat, British Columbia, owned by major companies such as Alcoa, Aluminerie Alouette, and Rio Tinto. The Canadian aluminum industry manufactures a diverse range of products, from doors and windows to beverage cans and electrical wiring. Despite ranking as the world’s 4th-largest producer of primary aluminum in 2022, Canada’s output accounts for only 4.4% of global production, with China leading the pack.
One notable advantage of Canada’s aluminum industry is its lower carbon footprint, attributed to its reliance on renewable energy sources like hydroelectric power. In 2023, Canada’s aluminum smelter production was estimated at around 3 million metric tons, with production levels remaining relatively stable over recent years, peaking in 2016 and 2017 at 3.2 million metric tons.
Canada stands as the world’s second-largest exporter of aluminum, with exports totaling $18.2 billion in 2022, primarily to the United States. The recent imposition of tariffs by the U.S. on Chinese imports has prompted Canadian industry leaders to advocate for similar measures to safeguard their competitiveness and economic interests.
Catherine Cobden, President and CEO of the Canadian Steel Producers Association, stressed the critical need for Canada to align with its North American trade partners under the Canada-United States-Mexico Agreement (CUSMA) to address the escalating challenges faced by the steel industry. The CSPA, representing 13 steel companies, including industry giants like Stelco and Rio Tinto, emphasizes the urgency of the situation following the U.S.’s tariff increase on Chinese steel and aluminum.
The CSPA and the Aluminium Association of Canada are pushing for a 25% tariff on Chinese steel and aluminum imports to prevent Canada from becoming a gateway for Chinese products circumventing U.S. and Mexican tariffs. Failure to take action could result in job losses and hinder economic growth in Canada’s steel and aluminum sectors, potentially undermining the protective measures implemented by the U.S. and Mexico.
Jean Simard, President and CEO of the Aluminium Association of Canada, highlighted the stark contrast in carbon intensity between Chinese and Canadian metals, urging the government to act swiftly to protect Canadian jobs, technology investments, and the environment. The potential influx of Chinese steel and aluminum into Canada could significantly impact the country’s carbon footprint and sustainable industrial practices.
The consequences of inaction are severe, with over 760,000 tonnes of Chinese steel entering the U.S. market in 2023 alone. Industry leaders fear that any diversion of Chinese steel from the U.S. market could flood Canada, further jeopardizing domestic steel and aluminum industries. The urgency for swift government intervention is emphasized to safeguard Canada’s economic interests and global market position in the face of mounting Chinese overcapacity threats.
As the Canadian government deliberates on its course of action, industry leaders stress the imperative need for immediate and decisive measures to shield the country’s steel and aluminum sectors from the looming challenges posed by Chinese overcapacity.
