Canada To Spend C$100 Million To Protect Its Aluminium, Steel Industries

Canada’s federal government announced this Monday C$100 million (EUR66 million) in non-repayable contributions for small- and medium-sized aluminium and steel manufacturers and consumers in Canada. The funding follows stalled talks between the US and Canada regarding the removal of US duties on Canadian imports of aluminium and steel.

Announcing the federal investment programme at Nova Steel in Hamilton in the province of Ontario, Navdeep Bains – minister of innovation, science and economic development – said the funds will alleviate the difficulties the domestic industries faced since the Trump administration imposed Section 232 tariffs on grounds of national security.

“We recognize these industries have been subjected to and impacted by unfair and illegal tariffs imposed by the United States under Section 232,” Bains said. “These aluminium and steel tariffs are completely unacceptable.”

“Our investment to support small and medium-sized producers and users across the country will help businesses innovate to drive productivity, scale up and expand into new markets to create good middle-class jobs.”

The government said “escalating commodity prices” and “increasing financial and competitive pressures” are significantly impacting producer and consumer SMEs operating within Canadian steel and aluminium supply chains.

The federal funding is expected to assist around 300 SMEs within these industries. Aluminium or steel must account for at least 20 per cent of a firm’s input costs in order to unlock financial help for the government. Specific contributions will start from as little as C$150,000 (EUR 100,000) and will also support firms in “early adoption or adaptation of leading-edge technologies and processes to improve productivity,” mentioned government officials in a statement.

Where're Canada's #aluminium producers going when faced with Trump tariffs? How do global politics affect trade in aluminium?

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The current funding will come in addition to a C$2 billion investment announced by the Canadian government in March 2018 that are in place to support Canadian businesses involved in the country’s aluminium and steel industries.

The Section 232 tariffs imposed a 25 per cent duty on steel and 10 per cent on aluminium imported into the US. Widely seen as an unlawful protective measure, the move is currently challenged by affected countries at the WTO level.

Canada’s government has so failed in its negotiations with the Trump administration despite a broad support base in both governments to lift the tariffs. While many government officials expressed hope for their imminent removal to enable the ratification of the recently renegotiated USMCA trade agreement, Canada’s PM Trudeau’s was unable to swing Trump’s position. In the meantime, Canadian aluminium producers have been scrambling for new markets for their metal with Canada’s primary aluminium export to the EU increasing eleven times last year.