U.S. Agriculture Secretary Sonny Perdue talks at a news conference in Fargo, N.D., on Friday, March 9, 2018. Perdue spoke about how President Donald Trump’s tariffs on steel and aluminum might help farmers get a better deal in the long run if the North American Free Trade Agreement is improved. From left are North Dakota Gov. Doug Burgum, U.S Rep. Kevin Cramer, Perdue, and U.S. Sens. John Hoeven and Heidi Heitkamp. It was the first trip to North Dakota for Perdue, who has now visited 34 states. (AP Photo/Dave Kolpack)

Metal producers see relief in tariff dodge but grapple with unknowns

CALGARY — Canadian steel and aluminum producers have dodged U.S. President Donald Trump’s global tariffs but the industry says it continues to grapple with the uncertainty the debate has created.

The indefinite exemption announced Thursday on the 10 per cent aluminum and 25 per cent steel tariffs is a reprieve, said Aluminium Association of Canada president Jean Simard, but the whole affair has created too many unknowns to attract new investment.

“There’s enough uncertainty to hinder any potential expansion project, because you know, you don’t predicate billions of dollars of investment on expansions when you don’t know what’s hanging out there in the future.”

Getting a permanent exemption is the priority for now, but Simard is also concerned about how the tariffs that apply to all other countries but Mexico will affect users of the products in the U.S. market.

“The U.S. is going to be the most expensive place in the world to buy aluminium, which is not good for anyone.”

Then there are the global repercussions of the U.S. launching a trade war and the potential escalation of industry disruptions, said Simard.

“This will be the first time the global industry goes through a shock like this. So what will be the collateral damages over and above the direct damages, the direct impact? It’s hard to see how the market will adjust, but one thing’s sure, it’s going to destroy some value.”

The uncertainty could disrupt both short-term sales and long-term investments in the steel industry industry as well, said Peter Warrian, a senior research fellow at the University of Toronto’s Munk School of Global Affairs.

“This injects uncertainty. People are used to risk, but now you’ve got uncertainty which is a qualitatively different thing.”

Order cycles in steel are generally about six to eight weeks, but the lack of certainty on the tariff issue complicates those sales, he said.

“You’re trying to talk to someone, and they don’t know what the price of steel is going to be six to eight weeks from now. So there’s a short-term issue.”

The steady flow of orders is important, because the steel producers need to keep at a high production rate to justify running the energy intensive furnaces and machinery, said Warrian.

“If you’re not running at somewhere between 80 and 85 per cent of capacity, you can lose a lot of money in a hurry.”

There’s been uncertainty in the industry ever since Trump initiated the national security-based tariff investigation, so companies will just continue to try and adapt to the changing circumstances, said Canadian Steel Producers Association president Joseph Galimberti.

“Companies have had to be in close contact with their customers throughout the 232 process, and yesterday’s announcement, while it gives some comfort, I don’t think negates the need for our member companies to be in active contact with their customers to be responsive to concerns going forward.”

Galimberti said there’s some comfort in Canada being exempt, especially since at times it didn’t look like it was going to happen, but overall companies are having to get used to the new reality of unpredictability.

“This is just the world now, it just is…even if there is a completed NAFTA, I don’t think we can go back to a place where we’re like things are great, it’s all cool.”

Just Posted

Amanda Lindhout kidnapper sentenced to 15 years in prison

OTTAWA — A Somalian man found guilty in the kidnapping of Amanda… Continue reading

Police suspect fire at mosque in Alberta town was deliberately set

EDSON, Alta. — RCMP in Alberta say they’re investigating an arson at… Continue reading

Indigenous protesters in Washington declare Trans Mountain won’t be built

VANCOUVER — Cedar George-Parker remembers the moment he decided to devote his… Continue reading

In Bill Morneau’s riding, 40 per cent of children live in poverty, report says

OTTAWA — Four in every 10 children residing in Finance Minister Bill… Continue reading

Strong quake near Osaka, Japan, kills 3, knocks over walls

TOKYO — Residents in western Japan were cleaning up debris Monday evening… Continue reading

WATCH: Central Alberta High School Soccer League champs crowned

Lindsay Thurber girls’ team and Notre Dame boys’ team won Saturday at Edgar Park Field in Red Deer

Roll out the barrels: Christo artwork floats on London lake

LONDON — The ducks, geese and hardy cold-water swimmers in London’s Hyde… Continue reading

Just For Laughs production company promotes COO Bruce Hills to president

MONTREAL — The production company behind Montreal’s Just For Laughs comedy festival… Continue reading

Auto parts firm Magna plans electric vehicle joint ventures with Chinese company

AURORA, Ont. — Magna International Inc. says it will form two new… Continue reading

Collection featuring Group of Seven paintings donated to University of Lethbridge

LETHBRIDGE, Alta. — Margaret (Marmie) Perkins Hess spent a lifetime following her… Continue reading

5 dead as SUV chased by Border Patrol crashes in South Texas

BIG WELLS, Texas — At least five people were killed and several… Continue reading

Ramifications of a trade war: an expert look at the numbers for Canada

OTTAWA — A new analysis of escalating trade disputes involving the United… Continue reading

Deliberate spill: study launched to test crude and bitumen impact on lake life

KENORA, Ont. — Researchers were in northwestern Ontario over the weekend spilling… Continue reading

Most Read

Five-day delivery plus unlimited digital access for $185 for 260 issues (must live in delivery area to qualify) Unlimited Digital Access 99 cents for the first four weeks and then only $15 per month Five-day delivery plus unlimited digital access for $15 a month