Canadian Steel Producers Call for Protection Against Chinese Oversupply

Coils of steel sit in storage in a port authority facility in Hamilton, Ontario, Canada, on March 9, 2018. (Peter Power/Reuters)

Canadian steel producers are calling on the federal government to protect their industry from Chinese oversupply. The call follows Ottawa’s announcement of a 30-day consultation on potential policy responses to “unfair competition” from China in the electric vehicle (EV) industry.

Deputy Prime Minister Chrystia Freeland announced on June 24 that the federal government is considering imposing tariffs on Chinese-made EVs, saying that Beijing is “quite intentionally generating a global oversupply” that undermines EV producers in Canada and around the world.

Catherine Cobden, president and CEO of the Canadian Steel Producers Association (CSPA), said this announcement signals that Ottawa is recognizing the “devastating impact” of Chinese excess industrial capacity on Canada, including on domestic jobs and competitiveness. She said that the consultations on EV oversupply don’t go far enough to address the extent of the problem, highlighting the impacts of Chinese overcapacity on other Canadian industries.

“As a major player in the automotive supply chain, we urgently call on the government to expand these consultations to include other industry sectors that are at the mercy of intentional actions by China to erode Canada’s competitiveness and that of its allies,” she said in a June 24 statement.

Canada’s steel industry, a critical supplier to the North American automotive sector, is already feeling the impact of Chinese oversupply, according to CSPA. The association said that more than half of the world’s steel capacity resides in China, and as its domestic demand declines, excess steel capacity is expected to worsen.

The United States recently announced new measures in response to China’s impact on its steel industry. U.S. President Joe Biden raised tariffs on Chinese steel products to 25 percent, in addition to announcing increased tariffs on Chinese EVs on May 14.

The CSPA noted that 750,000 tons of Chinese steel are currently sold on the U.S. market annually. Following the U.S. tariff increase, it said this volume is expected to be diverted to other markets unless protections are enhanced. The CSPA noted that even with all current trade remedy measures in place in Canada, China still ranks third in steel exports to the country.

Currently, more than 60 percent of all Canadian trade remedy measures addressing steel target China, according to CSPA.

“Our system is ill suited for challenges of this scale,” Ms. Cobden said. “We should be looking at a broad and deep imposition of at least a 25% tariff on all melted and poured Chinese steel products entering Canada.”

She also called for aligning with the United States to take swift action across the automotive supply chain, stating, “We need to act, and we need to act fast.”

China has become a major supplier of EV vehicles and batteries due in part to increased government subsidies. In 2021, nearly 80 percent of all global lithium-ion batteries for electric vehicles originated from China. By 2023, roughly one in five EVs sold in Europe had been manufactured in China.

In May, the United States increased its tariff on Chinese EVs from 25 percent to 100 percent. Additional protections were also introduced for lithium-ion batteries and certain clean energy products. Similarly, this month, the European Union unveiled plans to raise tariffs on Chinese EVs to 38.1 percent, effective in July.

Matthew Horwood and The Canadian Press contributed to this report.