Layoffs begin in Canada’s steel industry as Trump’s trade war stokes fear, frustration

As he speaks to workers across the country, the fear, says union leader Marty Warren, is palpable.

 

“Our members are anxious. They’re frustrated. Their jobs are under threat and … there’s no reason for it,” said Warren, national director for Canada at United Steelworkers.

 

“It” is the trade war sparked by U.S. President Donald Trump. This week, Trump imposed 25 per cent tariffs on all steel and aluminum imported to the U.S. On April 2, Canadian steel and aluminum could be facing another 25 per cent levy when across-the-board tariffs on all imports from Canada and Mexico are scheduled to take effect.

 

Union leaders, industry groups, executives and analysts say the damage from the trade war is already taking its toll, and could get substantially worse.

 

“Twenty-five per cent is very difficult. Fifty would be catastrophic,” said Catherine Cobden, president of the Canadian Steel Producers Association. Canada supplies roughly 20 per cent of the steel used in the U.S., according to CSPA estimates. That puts the industry in a much more tenuous position than Canada’s aluminum industry, which supplies 65 to 70 per cent of the aluminum used in the U.S.

Already, noted Cobden, some steel companies began cutting back production levels and doing layoffs, even before the tariffs came into force this week.

 

“We started to hear from our members about job losses, about production curtailments. Instead of running three lines they were running two lines or two shifts, that sort of thing,” said Cobden.

 

Roughly 23,000 people are directly employed in the Canadian steel industry, with another 100,000 or so jobs indirectly supported, including in the automotive, aerospace and defence sectors, according to industry statistics.

 

After stock markets closed Wednesday, Sault Ste. Marie, Ont.-based Algoma Steel announced it had cut its fourth quarter loss to $66.5 million, down from $84.8 million in the same period a year ago, partly on a gain in foreign exchange.

 

The company said in its earnings release that it’s simply too early to tell the full financial impact of the tariffs.

 

“The company is currently assessing the impact of these tariffs and tariff threats. The tariffs are expected to have a material and adverse impact on the Company’s financial position, results of operations and liquidity; however, an estimate of the financial impact cannot be made at this time,” Algoma Steel said in a news release.

 

Earlier this week, Algoma confirmed it had laid off 20 workers in anticipation of the tariffs imposed on all steel and aluminum imports to the U.S. Layoffs also began this week at Ivaco Rolling Mills, a steel plant in l’Orignal, Ont., halfway between Ottawa and Montreal. Now that the initial tariff is in effect, said Cobden, that could start to snowball.

 

“That already started just on the threat of the 25 per cent tariff. We’re going to see even more of that because, of course, not all customers are prepared to pay the 25 per cent,” said Cobden.

 

Stacking more on top of that come April 2 would be even worse, Cobden added.

 

“It’s already difficult, but 50 per cent would be the worst-case scenario. It wouldn’t matter then if it moved to 75. At 50 per cent, we’d see devastation across the industry,” Cobden said.

 

For other Canadian industries facing tariffs, the logical response has been to try and seek non-U.S. markets for their products. But that’s not a realistic option in the steel industry right now, said Cobden, because of a glut in the worldwide supply, stemming largely from lower-cost exports from China and, increasingly, from India.

 

“China just floods the entire globe, the entire world. So this notion of Canada pivoting to new markets and developing new markets is wonderful for many other sectors, but does not apply to steel,” said Cobden, adding that sticking closer to home is a more feasible way to salvage the industry. “If it’s not going to be the U.S., there’s really no other choice but Canada.”

The glut of Chinese steel on global markets already had other steel-producing countries scrambling to compete, said Joseph McDermid, director of the McMaster Steel Research Centre. With the tariffs making it harder to keep shipping into the U.S. market, that battle is even more desperate all-around, he added.

 

“If you’re trying to break into a market that’s already at overcapacity, that just kind of puts into perspective how difficult it’s going to be,” said McDermid. “It’s going to be challenging to be sure.”

 

Just keeping market share in Canada will be tough for domestic producers, said USW’s Warren, unless all imports face tariffs.

 

“Anything that comes into this country from a foreign producer has got to be tariffed, or else we will lose our domestic steel industry,” said Warren. “We have got to stop the dumping of any type of steel, Chinese steel, Indian steel.”

 

What’s at risk with the trade war are not just jobs in steel, said Warren, but also the industry’s broader economic impact, and some measure of industrial self-reliance.

 

“It’s like kind of the pillar of a nation, in my view, to have a domestic steel industry,” said Warren. “People should realize: What’s a nation without a steel industry?”

 

 

 

 

 

This article was first reported by The Star