Canada Backs ArcelorMittal, Won't Rule Out U.S. Steel Quota Deal

© Reuters. Canada Backs ArcelorMittal, Won't Rule Out U.S. Steel Quota Deal

(Bloomberg) -- Canadian government funding for ArcelorMittal is the first of a series of steps the country will take to support the steel industry amid a tariff fight with the U.S., Canada’s industry minister says.

Navdeep Bains announced on Friday funding of up to C$49.9 million ($38 million), a mix of grants and loans, as part of a C$205 million modernization project at the Hamilton, Ontario plant of the Luxembourg-based steelmaker’s Canadian unit, ArcelorMittal Dofasco.

It’s the first announcement from a C$250 million fund unveiled earlier this year to support steel, aluminum and manufacturing companies affected by the tariff standoff, Bains said, and more are coming. He left the door open to Canada accepting quotas on metal exports, but said U.S. tariffs must be eliminated.

“It’s a priority for us to eliminate the tariffs on aluminum and steel, so we’re very engaged with our American counterparts,” Bains, whose formal title is minister of innovation, science and economic development, said Friday in a phone interview. “Today’s announcement really demonstrates a commitment to the steel industry and steel workers.”

Quotas Possible

The U.S. imposed import tariffs of 25 percent on Canadian steel and 10 percent on aluminum as of June 1, and Canada responded in kind a month later with its own tariffs. Despite a Sept. 30 deal to update the North American Free Trade Agreement, the metals tariffs remain in place. Canada accepted a quota on tariff-free auto shipments as part of the trade deal, and a similar solution is seen by some as the likely solution to the metals tariffs.

Bains wouldn’t rule out a quota when asked repeatedly whether Canada would accept that as an alternative to tariffs -- even one like the auto sector, which is largely symbolic and well above current production. He said Canada’s focus remains on eliminating the tariffs.

After the Nafta deal, “let’s use the goodwill and momentum going forward to ultimately eliminate the tariff,” Bains said. “We’re making the business case, and the economics of it are very compelling.” Canada has regularly said its preference is for both countries to simply eliminate their tariffs.

When the Canadian government finalized its retaliatory tariffs in June, it announced C$250 million for the steel, aluminum and manufacturing sectors affected by the tariff fight. Friday’s announcement comes from that fund and more announcements will follow and potentially top C$250 million.

“Absolutely we will be making additional announcements in the coming weeks and months. This fund is oversubscribed,” he said.