Notice of intent to impose surtaxes on Chinese steel and aluminum in response to unfair Chinese trade practices

Background

The government recently held consultations on potential policy responses to unfair Chinese trade practices in the electric vehicles (EVs) sector.  During this process, stakeholders shared concerns about unfair competition from China, including pervasive subsidization, and lack of rigorous labour and environmental standards in other sectors essential to the net-zero transition, including steel and aluminum. They indicated that Chinese producers that benefit from unfair, non-market acts, policies and practices are jeopardizing investments for producers around the world, including in Canada, thereby threatening workers and businesses in those sectors, and undermining Canada's long term economic security.

In the steel and aluminum sectors, Canada, likeminded trading partners, and the Organisation for Economic Cooperation and Development (OECD) have long noted concerns with Chinese structural overcapacity and impacts on global trade. China is the world's largest steelmaker, producing over 1 billion metric tonnes in 2023 (54 per cent of global production). Despite softening global demand, China has increased its capacity by 18.6 million metric tonnes (more than Canada's total production capacity) since 2018. Similarly, China's primary aluminum capacity has grown from 11 per cent of global production share to 59 per cent over the last two decades, with the Chinese government investing up to $70 billion between 2013-2017 alone, according to the OECD. The significant subsidization and other non-market policies and practices by the Chinese government in these sectors, often utilizing higher-carbon production technology, have contributed to persistent, non-market structural overcapacity, affecting the long-term economic viability of market-oriented Canadian firms.

Key likeminded trading partners such as the United States and Mexico have identified similar concerns with Chinese policies and practices and overcapacity in the steel and aluminum sectors. Most notably, on May 14, 2024, the United States announced an increase in its Section 301 tariffs on a range of products imported from China, including steel and aluminum.

Scope of Surtaxes

In response to the exceptional threats posed by Chinese practices, the federal government intends to impose a 25 per cent surtax on imports of steel and aluminum products from China under section 53 of the Customs Tariff to protect Canada's workers and investments in these sectors from China's unfair trade policies and to prevent trade diversion resulting from recent actions taken by Canadian trading partners.

The initial list of goods subject to surtaxes is in Annex 1 below. These surtaxes will apply to goods originating from China, which shall be considered as those goods eligible to be marked as a good of China in accordance with the Determination of Country of Origin for the Purpose of Marking Goods (Non-CUSMA Countries) Regulations.

The final list of goods subject to the surtaxes will be announced by October 1, 2024, with the surtaxes taking effect on October 15, 2024. The surtaxes will not apply to Chinese goods that are in transit to Canada on the day on which these surtaxes come into force.

It is the government's intention that the surtaxes will be reviewed within a period of one year from implementation and could be extended for a further period of time and supplemented by additional measures, as appropriate.

Contact Us

Written comments should be provided no later than September 20, 2024. Submissions, at a minimum, should include the following information:

1. Company/organization name, address, telephone number, and contact person.
2. The relevant eight-digit tariff item(s) and description of the goods of particular interest.
3. Reasons for the expressed support for, or concern with, the proposed surtaxes, including detailed information substantiating any expected beneficial or adverse impact.
4. Indication of whether any information provided is commercially sensitive.

Email your comments and feedback to tariff-tarif@fin.gc.ca, including "Steel and aluminum surtaxes" in the subject line.

Comments and feedback may also be sent by mail to:

International Trade Policy Division (Steel and Aluminum Surtaxes)

Department of Finance
90 Elgin Street, 14th Floor
Ottawa, Ontario K1A 0G5

Privacy

In order to respect privacy and confidentiality, when providing your submission please advise whether you:

• Consent to the disclosure of your submission in whole or in part;
• Request that your identity and any personal identifiers be removed prior to publication; and,
• Wish any portions of your submission to be kept confidential (if so, clearly identify the confidential portions).

Information received throughout this submission process is subject to the Access to Information Act and the Privacy Act. Should you express an intention that your submission, or any portions thereof, be considered confidential, the Department of Finance Canada will make all reasonable efforts to protect this information.

Annex 1

Descriptions are included for illustrative purposes, with the scope established by the tariff item in column 1. For precise descriptions, please refer to the Schedule to Canada's Customs Tariff.