Ontario’s steelmakers already feeling Trump’s tariffs pain
Well before U.S. President Donald Trump followed through on his threat to levy steep tariffs on imports of Canadian steel, Ontario’s National Steel Car was already feeling some pain.
Starting in mid-November, with the newly elected Mr. Trump at that point only threatening to impose tariffs on Canada, a major customer for a rail car put its order on hold, said Frank Crowder, president of USW Local 7135, the union that represents the workers at the company.
The union suspected that happened because of the tariffs threat, but it never received confirmation from National Steel Car, based in Hamilton.
Either way, not long after that, about 90 per cent of National Steel Car’s 1,400-strong work force was laid off between roughly mid-November and just before Christmas, said Mr. Crowder.
While most of those workers have since been brought back to work (190 are still laid off), worries about new cuts loom. That’s because of the company’s reliance on the U.S. market and its exposure to the tariffs that Mr. Trump levelled on the global steel and aluminum sectors, effective midnight Wednesday.
There is a sense of déjà vu for the steel industry, but there is also something very different and potentially more damaging going on this time. Canadian steel makers endured a 25-per-cent tariff for about a year during Mr. Trump’s first presidential term.
However, back in 2018, steel-products companies, such as National Steel Car, were exempt. This time, Mr. Trump’s tariffs are across the board in steel, and include both the primary steel makers, as well as the finished steel-products companies, meaning National Steel Car is in the thick of it.
According to Mr. Crowder, who works at the company as a pipe welder, 85 to 90 per cent of the company’s output of freight rail cars are sold into the U.S. market.
“They don’t know which way to turn, because we don’t know what’s happening. Every second day, Trump is changing his mind,” Mr. Crowder said.
In fact, Mr. Trump is sometimes changing his mind more often than that. Early Tuesday, he threatened to put 50-per-cent tariffs on Canadian steel, only to change course later that day. Mr. Trump got his back up after Ontario Premier Doug Ford put a 25-per-cent surcharge on exports of electricity to the U.S. But after Mr. Ford suspended the surcharge, Mr. Trump reverted to his original – but still damaging – plan to impose the blanket 25-per-cent tariff on steel.
Shawn McMullin, a pipefitter at National Steel Car and recording secretary with USW 7135, said the tariffs are bringing a double dose of uncertainty to what is a precarious industry by nature. The steel industry is order-based, so workers are routinely brought on or laid off based on the book of business.
“We’re deeply concerned about our future,” Mr. McMullin said. “Manufacturing has been under attack for decades now, so this is just another attack on the working class. We’re trying to simply put food on our tables. It just feels like the ruling class continuously punches down on us.”
Gregory Aziz, chairman and CEO of National Steel Car, declined to comment.
Stelco, one of the three big primary steelmakers in Canada, has sprawling plants in Hamilton and Nanticoke, Ont. It appears to be better insulated than National Steel Car against the tariffs. That’s because about 70 per cent of what the company produces domestically is sold to Canadian customers, said John McElroy, president of USW Local 8782.
Mr. McElroy works in the sweltering coke ovens, where coking coal is literally baked as part of the steel-making process. He suits up in what is essentially nuclear-grade protective gear to shield him from temperatures that can hit 65 degrees. He’s the fourth generation of his family to work at the company dating back to the 1920s, and his daughter also works there now.
“It’s just been chaos,” he said. “We don’t know whether we’re coming or going. We’re not sure of the business plan. It seems that we’re just riding the roller coaster.”
In a few weeks, he’ll know more. Stelco’s U.S.-based owner, Cleveland-Cliffs, will meet with him to discuss the next steps. For now, everyone is watching and waiting to see what Mr. Trump will or won’t do. Last week, he imposed 25-per-cent tariffs on most Canadian imports, separate from the tariffs on steel and aluminum, only to lift a major swath of the levies a mere two days later.
Terry McKinnon, vice-president, Local 8782 with USW and an inspector at Stelco who oversees the quality of steel slabs, has worked at the company for 42 years under five different owners. He pointed out one bright spot of the tariff chaos.
“Prices have gone up from $700 to over $900 a ton. So there’s a positive side to it.”
But with customers paying more for Canadian-made steel, it’s unclear whether they will still be able to afford to buy in the months and possibly years ahead, depending on how long the tariffs last.
Cleveland Cliffs, meanwhile, has celebrated the Trump tariffs. That’s likely because Cliffs’ U.S. operations will have an easier time competing against foreign steelmakers that are subject to the levies. Cliffs CEO Lourenco Goncalves in a Feb. 25 conference call congratulated Mr. Trump.
“These tariffs are critical to addressing the problem and we thank the Trump administration to have the courage to implement these tariffs,” he said. “While the United States continues to be in a net short position on steel, the biggest exporters of steel into the U.S. are all guilty of overcapacity and overproduction.” Cleveland-Cliffs did not respond to an interview request from The Globe and Mail.
Michael Garcia, the CEO of Algoma Steel, based in Sault Ste. Marie, Ont., said the Trump tariffs are making the company compete harder to win domestic business. Right now, Algoma, which is the only independent Canadian steel maker, is highly dependent on the U.S. market, the source of about half of its revenue. However, about half of the steel bought by Canadian customers is foreign, meaning there is a big market to go after.
“We are scanning the market aggressively, talking to anybody in Canada that’s buying steel, and if they aren’t buying Canadian steel or Algoma steel, we want to have a conversation,” he said.
This article was first reported by The Globe and Mail
