FILE- In this April 27, 2018, file photo, steel coils are stored at the Thyssenkrupp steel factory in Duisburg, Germany. Duisburg is the biggest steel producer site in Europe. Many small companies in the United States can expect to pay more for steel and aluminum following the Trump administration’s imposition of tariffs on imports from Europe, Canada and Mexico, small business advocacy groups say. (AP Photo/Martin Meissner, File)

Ottawa studying impact of steel, aluminum tariffs before supporting industry

MONTREAL — The Canadian government will study the impact of U.S. tariffs on the steel and aluminum industries before determining the financial support required to protect local jobs, the international trade minister said Monday.

“The message we have been saying to everyone watching is we will always be there for the workers of that industry,” Francois-Philippe Champagne told reporters at a two-day international aluminum summit.

“We have shown it in the softwood lumber case and we will show it again that we will have their back.”

The minister said the government will work with provinces to support the metal industries but didn’t go as far as Quebec which committed to help smaller aluminum producers.

“If there is a risk of reducing their production or a risk of not being able to export as much, we will be there to support them in making sure that they maintain the jobs that they have in that sector,” Economic Development Minister Dominique Anglade said.

The minister said a meeting will take place next Monday with the various players before details of the support are announced.

U.S. President Donald Trump created global uncertainty after he ended exemptions for Canada, Mexico and the European Union by imposing 25 per cent import duties on steel and 10 per cent on aluminum.

That prompted Canada to retaliate by moving to add $16.6 billion in tariffs of its own that are set to be applied July 1. They will match the steel and aluminum tariffs and add duties to a wide range of consumer goods.

The U.S. aluminum tariffs aren’t expected to have an immediate impact on jobs, but the goal is to avoid losing companies that transform aluminum to other products that are economically important for the industry.

The summit ended with delegates calling on G7 leaders meeting next week in Quebec to formally request the G20 to create a Global Multilateral and Governmental Forum on Aluminum Overcapacity and establish an international monitoring system.

Subsidized overcapacity and market-distorting behaviour from China is undermining the growth of the global aluminum industry, it said in a communique.

Chinese primary smelting capacity is expected to grow 30 per cent in one year in 2018, adding 3.3 million tonnes of aluminum — more than Canada’s total production.

China is expected to produce 49 million tonnes or 54 per cent of global capacity this year.

“The United States is very well aware that China is the problem. China is the elephant in the room,” Jean Simard, president of the Aluminum Association of Canada said at a news conference.

He said U.S. tariffs are a political manoeuvre that has nothing to do with Canadian aluminum or steel.

Despite Trump’s tariff action, there is a lot of solidarity between the Canadian and American aluminum associations on China, he told reporters.

“I think this is a real opportunity for us to use this kind of situation, use this kind of environment as a stepping off point to combine efforts and focus on the problem of illegal subsidies in China that are driving overcapacity,” added Heidi Brock, who heads the Aluminum Association.

The 10 per cent tariff changes everything, added Raymond Chretien, Quebec’s chief trade negotiator and former Canadian ambassador to the U.S.

Representatives of large aluminum producers said the industry needs to use the crisis to raise public awareness and trigger multilateral action to tackle Chinese oversupply, which is the real problem that has triggered U.S. action.

“For the time being, this tariff is not aligned with the problem but still let’s use this momentum to make sure that we can do something fast,” said Gervais Jacques, chief operating officer of Rio Tinto Alcan’s Atlantic operation.

Trump has generated chaos with his aggressive approach to trade but may have created an opportunity to build a multilateral trading system that deals with the reality of China’s state-owned enterprises, said Chad Bown, senior fellow of the Peterson Institute for International Economics.

“I think he has caught the attention of a lot of people around the world, including China, and China may be willing to engage on issues that they hadn’t previously been willing to come to the bargaining table before,” he said.

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