Canada’s steel crisis demands more than half-measures from Ottawa

By Marty Warren
National Director for Canada
United Steelworkers

A Globe and Mail editorial published June 30, titled “Ottawa must steel itself against tariffs,” rightly identifies a fundamental concern: global overcapacity, fueled by state-subsidized production in China and elsewhere, is devastating domestic steel industries around the world. Unfortunately, it understates the scale of the crisis in Canada — and the inadequacy of Ottawa’s response.

The federal government’s new tariff-rate quota on non-free-trade partners is too narrow to be effective. It excludes nearly two-thirds of Canadian steel imports, including from countries like South Korea and Vietnam, which have long records of dumping despite their trade agreements with Canada. Setting quotas at 2024 volumes — already distorted by steel trade flows diverted from the U.S. market — simply locks in already high levels of unfair imports that have devastated Canadian producers and workers.

The Canadian steel industry has already paid a high price for economic openness without a national industrial strategy.

In 1984, steel imports accounted for 15.5% of the Canadian market. Imports’ share of our market has since ballooned to a whopping 60% (World Steel Association, 2024 data).

Furthermore, roughly 23% of Canadian steel imports originate from carbon-intensive countries such as China, South Korea, Turkey and India, according to a 2024 Global Steel Trade Monitor report.

This high level of import penetration simply is not sustainable and undermines Canadian economic sovereignty.

It is indeed the case that global overcapacity is both driving and exacerbating these trends. The Canadian government’s liberal trade policies leave our domestic steel producers to unfairly compete with countries that subsidize their producers who then dump their products at fire sale prices in the global and Canadian markets.

The destruction of our domestic steel industry also undermines our climate goals and the substantial investments of Canadian steel producers to reduce energy consumption and emissions.

These investments achieved a 31.5% reduction in absolute GHG emissions from 1990 to 2016. Canada’s steel sector has the lowest GHG intensity globally for integrated steelmaking plants that produce steel from iron ore and the second-lowest GHG intensity for Electric Arc Furnace plants that produce steel from steel scrap.

The Canadian steel industry is vital to Canada’s economic performance and sovereignty. It is a critical supplier to industries in the Canadian supply chain, including the automotive, energy, construction, national defence and transportation sectors. Our domestic steel industry employs over 23,000 Canadians directly and as many as 160,000 indirectly. Even conservative estimates suggest that every direct job in the steel industry supports 3.3 other Canadian jobs.

The argument that “basic economics” provides a warning against protectionism ignores the fact that this position is what got us here in the first place. The steel crisis is the result of an ideological rather than practical commitment to open borders and minimal state intervention – even as our trading partners have for decades used subsidies, strategic investment and trade circumvention to their advantage.

Even conventional economists are now coming around to the idea that “basic economics” will not cut it in today’s competitive environment. We urgently need a more-sophisticated and nuanced approach to trade and industrial policy – one that recognizes the strategic role of steel and aluminum, enforces fair trade, protects workers and aligns with our climate and job-creation goals.

Steelworkers are not asking for walls. We’re asking for action: close the loopholes, expand trade enforcement and use public procurement to support Canadian-made steel and aluminum. Without such action, Ottawa’s plan remains a half-measure. With smart, targeted policies, we can keep jobs in Canada and ensure workers and families benefit from a strong industrial base and local economies continue to thrive.

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