The year-long fight over cross-border tariffs on steel and aluminum products has ended, but it inflicted widespread harm, crippled dealer-expansion plans and hampered new business for some parts makers.
Prolonged uncertainty over steel and aluminum prices prompted many customers of Canadian parts suppliers to find alternatives in the United States, said Flavio Volpe, president of the Automotive Parts Manufacturers’ Association (APMA). As a result, “There’s some business which may never come back,” he said.
During the dispute which ended in mid-May, the Canadian government collected more than $1.27 billion in retaliatory tariffs, according to a spokesperson for the federal finance department.
It’s revenue that will eventually be used to reimburse affected Canadian steel and aluminum companies and parts suppliers.
As of May 14, $223.1 million has been waived or refunded to Canadian parts suppliers impacted by the tariffs, according to the federal finance department.
The U.S. tariffs, which amounted to 25 per cent on steel and 10 per cent on aluminum products, were announced in March 2018, and imposed on Canada and Mexico in June. The move triggered retaliatory tariffs in a trade battle that boosted costs for companies in all three countries.
At Concord, Ont.-based Clover Tool Manufacturing, Vice-President George Zeni said the trade dispute cost his company $30 million in lost contracts over six years.
“Obviously, that is money that is gone forever, and the damage has been done,” Zeni said. “We are now bidding on new contracts, but it’s a lengthy process, and nothing is for certain anymore.”
WAITING FOR REBATES
Not even a federal government commitment to provide rebates to affected companies was able to stop the bleeding, parts suppliers say.
Zeni said he is still owed more than $500,000 in rebates from the federal government. Even applying for compensation is a lengthy, time-consuming process involving a complicated paper trail, he said.
“We have to show that steel we purchase passes through our shop and back out and into the U.S. before we can qualify for any rebates,” he explained. “If we take in 1,000 pounds of steel and produce 900 pounds of product, we have to show that it goes back into the U.S.”
Navdeep Bains, federal minister of innovation, science and economic development, said eliminating tariffs will help kick-start investment.
“It improves our competitiveness not only for Canada but for North America, because these unjust and unfair tariffs imposed by the Americans [were] adding additional costs and making us less competitive in North America and globally as well. Now that they’ve been eliminated, that just makes our products more competitive in North America and globally as well.
“That will ultimately create more jobs and more investment opportunities in the automotive sector and more broadly in the economy.”
$1 BILLION HIT TO STEEL BIZ
But Volpe said it will take time for the parts industry to return to a pre-tariff position of relative stability.
“It’s a negotiating victory for the Canadian team, but it’s a fight which should never have taken place because it made it tougher for companies on both sides of the border to do business and make a profit in an industry where the margins are already very tight ... it left everyone in exactly the same boat because all are operating under the same business model in a competitive industry.”
The Canadian Steel Producers Association said the U.S. tariffs have cost the domestic industry more than $1 billion in addition to lost investment and jobs.
In the automotive retail sector, the tariffs wreaked havoc on multimillion-dollar renovation plans by some dealers.
Bob Verwey, president of Owasco Inc. — which owns Audi, Volkswagen and recreational-vehicle dealerships in Clarington, Ont., east of Toronto — has been waiting to develop 41 acres (16.6 hectares) and complete a second phase of a $21-million expansion project.
“We built a $9-million recreational-vehicle dealership and planned to follow up with phase two,” Verwey said. “But when the tariffs took effect, we shelved it. We still plan to move ahead, but we are going to wait until things settle down.”
The delay also caused problems for local skilled trades workers because the project, which had all the necessary municipal approvals in place, had gone out to tender, Verwey said.
“They had quoted on the job and then we had to pull back,” he said. “It will get done, but right now there is no timetable.”
Toronto Bureau Reporter John Irwin contributed to this story.