Canada Mulls Imposition Of Steel Tariffs

by Mike Godfrey, Tax-News.com, Washington

01 April 2002

Calls from the Canadian steel industry to impose tariffs on imported steel products similar to those recently put in place by the United States have sparked fears of a global trade war.

Although Canada and Mexico were both exempted from the US tax, steelmakers argue that Canada will become a 'dumping ground' for foreign steel which would otherwise have been imported to the American markets. 'The time to act is now,' Lawrence McBrearty of the United Steelworkers of America in Canada told the Wall Street Journal. 'We face plant closures and massive layoffs if the government doesn't do something.'

The Canadian authorities appear to have taken the industry at its word, and it was revealed on Friday that Ottowa has launched a 'safeguard investigation' in order to determine whether steel imports to the country are rising as a result of the US decision.

However, representatives from a whole host of other Canadian industries, including wheat farmers and the aerospace sector, have expressed concerns that such a move could provoke other countries to retaliate, leaving the country's trade-dependent export markets struggling.

Speaking to the WSJ, Chief Economist at Export Development Canada, Stephen Poloz, warned that there was a 'substantial risk' that Canada will become embroiled in a global trade war if it imposes tariffs on imported steel.

'Once you engage in a trade war - and that's what taking these steps means - then you're joining the fray and are subject to the next salvo,' he cautioned, adding that: 'as in any war, retaliation often means escalation.'

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