G&M: Quebec backs aluminum, steel companies hit by U.S. tariffs

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Quebec backs aluminum, steel companies hit by U.S. tariffs
STEVEN CHASE
OTTAWA
PUBLISHED JUNE 11, 2018
UPDATED 13 HOURS AGO
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Quebec is offering $100-million in loans and guarantees to steel and aluminum companies hit by recent U.S. tariffs, raising the possibility of trade complaints against Canadian firms.

Dominique Anglade, Quebec’s Economic Minister, told reporters in Montreal that the program came after aluminum and steel companies received feedback from clients who are not willing to pay the tariffs.

“What they’re telling us is some of their contracts were cancelled,” she said, adding some had already slowed production.

Open this photo in gallery
Canada Foreign Minister Chrystia Freeland speaks to members of the media in Quebec City on June 10, 2018. Ms. Freeland will visit the U.S. capital on Wednesday and Thursday in an effort to lobby congressional support for the North American free-trade agreement.

YVES HERMAN/REUTERS

Ten days ago, the United States imposed hefty tariffs on Canadian steel and aluminum imports, characterizing shipments from Canada as a threat to national security. Over the weekend, the President threatened to impose 25-per-cent import taxes on foreign car and truck imports, a move that would devastate Canada’s auto industry.

Ms. Anglade said the impact of the tariffs on metals was felt more quickly than when the United States announced tariffs on softwood lumber in 2017.

Related: What’s at stake if the U.S. slaps tariffs on Canadian auto exports?

Americans turn to social media to #ThankCanada in wake of G7 tensions

The Quebec assistance could very well draw the ire of U.S. industry and trigger allegations of unfair subsidies, one veteran cross-border trade watcher said.

Daniel Ujczo, an Ohio-based trade lawyer with Dickinson Wright who has worked for both the Canadian and U.S. governments, said it’s possible U.S. metal companies could use the loan guarantees as the basis to ask for a new investigation of Canadian trade practices.

The Quebec aid to steel and aluminum firms is the first step by a Canadian government to make good on promises to help afflicted companies and workers since punitive U.S. import taxes took effect on June 1.

Unlike primary producers such as Rio Tinto, Alcoa and Aluminerie Alouette – which operate nine aluminum smelters in Quebec – smaller processors say they are not strong enough to absorb the 10-per-cent tariff.

Some small and medium-sized companies say that U.S. customers have already warned they will not pay the increased cost from the surtax.

The Trudeau government has said it will also support the two industries, but has yet to unveil any concrete measures.

Meanwhile, Ottawa is redoubling efforts to win friends and build influence in Washington despite threats and insults from U.S. President Donald Trump on the weekend that have roiled cross-border relations.

Foreign Affairs Minister Chrystia Freeland is visiting Washington on Wednesday and Thursday, where she will seek support in Congress to get talks on the North American free-trade agreement back on track and spare Canada from the tariffs on steel and aluminum and autos made in Canada.

Ms. Freeland is visiting Washington on Wednesday to accept Foreign Policy magazine’s Diplomat of the Year award.

She will use the visit to meet with members of the U.S. Senate Committee on Foreign Relations.

It’s possible Ms. Freeland could end up meeting with U.S. Trade Representative Robert Lighthizer, as well. As of Monday, however, no get-together was scheduled, her office said.

Ms. Freeland talked to Mr. Lighthizer by telephone on Sunday and they both agreed they want to continue talking, a Canadian official said.

Fisheries Minister Dominic LeBlanc repeated the Liberal government’s pledge to offer assistance to affected Canadian steel and aluminum manufacturers and their workers. “We have been unequivocal. These tariffs imposed by the United States are unacceptable,” he said. “We will not stop working to support these sectors so vital to the economy of the whole country.”

Separately, Canada is taking steps to diversify trade beyond the United States.

International Trade Minister François-Philippe Champagne told the Commons on Monday that the federal government will introduce legislation before the House rises for the summer break to formally ratify the Trans-Pacific Partnership accord between 11 countries in the Pacific Rim including Canada, Japan, Malaysia and New Zealand.

NAFTA negotiators have not been meeting regularly for weeks and have no plans to resume regular talks. Late last month, Canadian officials told the Trump administration there were two U.S. demands they would never agree to in NAFTA: a sunset clause that would automatically terminate the deal in five years, and the abolition of the Chapter 19 dispute-resolution panels. Ottawa is willing to negotiate on every other contentious area, including automotive content rules, governmen t procurement and Canada’s protectionist supply-management system for dairy.

With reports from Adrian Morrow in Washington and Reuters.

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