Canada's government on Monday March 11 launched an initiative to assist Canadian businesses adversely affected by the United States' Section 232 tariffs.
The Regional Economic Growth through Innovation (REGI) program will provide Canadian $100 million to support small-to-medium-sized steel and aluminium companies hurt by the tariffs - 25% in the case of imported steel and 10% in the case of imported aluminium.
“In the face of unjust and illegal US tariffs hurting businesses and workers on both sides of the border, our government is standing shoulder to shoulder with our hard-working steel and aluminium workers and users of their world-class products,” said Navdeep Bains, Canada’s minister of innovation, science and economic development. “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 Section 232 tariffs, implemented by US President Donald Trump in March 2018 on national security grounds, caused significant steel and aluminium price volatility.
Fastmarkets AMM's US Midwest P1020 aluminium premium soared to 22-23 cents per lb in April 2018 - its highest level since February 2015. The premium has since eased to 19.25-19.5 cents per lb.
Fastmarkets AMM's daily US Midwest hot-rolled coil index was at $34.90 per hundredweight on March 8, down 23.9% from a near decade high of $45.84 per hundredweight last July.
REGI funds will be distributed to economic development agencies across the country. The funds are expected to assist roughly 300 businesses and are non-repayable. They will be given to firms undertaking projects aimed at improving productivity and competitiveness through new technologies, scaling and market diversification.
Canada's aluminium industry has been hit much harder by the Section 232 tariffs than the country's steel industry.
US imports of unwrought aluminium from Canada totaled 2.15 million tonnes in 2018, down 12.5% from 2.46 million tonnes in 2017. Canadian material accounted for 51.6% of the US' total unwrought aluminium imports in 2018, up from 50.4% in 2017.
Steel mill products imported by the US from Canada totaled 5.65 million tonnes in 2018, down from 5.68 million tonnes in 2017. Material from Canada represented 18.4% of total US steel mill product imports in 2018, up from 16.5% from the prior year.
Former US government officials, trade groups and US steel and aluminium market participants have predicted that the Trump administration will replace the Section 232 tariffs with quotas. Canadian government officials have been critical of the tariffs since they were introduced, and they remain a divisive topic as the US-Mexico-Canada Agreement awaits ratification by each country's legislative bodies.