The Impact of the Surtax on Steel Imports from China on Canadian Importers

In October of 2024, the Canadian Government intends to impose significant surtaxes to deter the import of imported Chinese steel, aluminum, and EVs. If you are a commercial importer of any of the above-listed goods, or if you are simply an importer who’s curious about what might come next from the Canadian government, we encourage you to read our regulation update and the official Department of Finance Canada’s release for the full details direct from the source. 

But why is Canada suddenly laser-focused on increasing its protections for Canadian industries? What does this have to do with Canada/China/US relations, and what can you, as a Canadian commercial importer, actually do to successfully navigate this new import tariff on steel, aluminum, and EVs? 

As a spoiler - it’s more than you think, and while it seems like a season of change for Canadian importers. If you are reading this - you are already a step ahead.

Anti-Dumping, Countervailing, and Marketplace Protectionism

Before we get into how best to navigate an increasingly protective Canadian government, it is vital we understand the systems and processes that are in play and the tools that they have to enact this new steel tariff in 2024. In Canada, the most famous law to combat inequalities in the international marketplace is the Special Import Measures Act (SIMA), which is most concerned with countervailing and anti-dumping duties that broadly describe this steel tariff. 

We go into some detail about this in this blog post from a few years ago, but at its most basic level, anti-dumping and countervailing duties are responses to complaints by specific industries about international companies utilizing what is considered unfair business practices to flood (or ‘dump’) Canadian markets with cheap goods thereby undercutting those national industries.

Antidumping duties specifically refer to additional charges placed on goods imported from specific countries for which it is impossible for Canadian industries to profitably compete. A great example, relevantly, are metals like steel and aluminum, which can be mined, processed, and shipped incredibly cheaply overseas in such a way that Canadian metal companies cannot contend. 

Countervailing duties are similar to antidumping duties in terms of outcome, but they are intended to address goods that can be shipped affordably because the international exporter is being subsidized by their government. 

These duties are generally brought about via a complaint from the national industry. These duties and additional taxes are essential to protecting Canadian industries and are frequently being applied, extended, and allowed to expire as the marketplace changes. 

While these processes are fundamentally what is at play here, there is an additional wrinkle to October’s announcement that is worthy of exploration.

The China/US Quagmire

Canada enacts and lets antidumping and countervailing duties expire all the time, and for the most part, they are direct reactions to complaints by national industries, but there is an additional element to this latest round of surtaxes that is worth discussing, and that is the constant presence of international politics. 

Canada’s relationship with the US heading into election season is at the forefront of both governments’ minds as both sides of the border work to shore up their economic defenses in what is almost always a tumultuous time for the markets. 

With most of these new tariffs being direct mirrors of the actions taken by the US government, it is clear that Canadian industry protectionism isn’t the entire motive for these changes, and with Chinese-made EV batteries, battery parts, critical minerals, semiconductors, and solar panels in the US’s crosshairs, it’s clear that it isn’t the end. 

It is, admittedly, a distinction without a real difference, but understanding the cause behind this round of regulation is important because it illustrates how changes like this can suddenly come about. Just like in the world of politics - in international trade, adaptability is going to be among your most valuable skills, and PCB can help. 

How To Stay Light On Your Feet on the International Stage

There are two ways to look at these new regulations, and both are vital for continued success in the days, months, and even years to come. 

The first perspective is how best to contend with what is here now. If you are an importer of any of the goods listed for October or any of the proposed goods that will almost certainly be added in the coming months, then this is the time to begin considering your options. PCB’s Trade Advisory Services are built to help importers explore opportunities in the face of this kind of adversity, and we have a wide range of services that can help you pivot your business towards a lucrative outcome despite, and in some cases, because of these regulatory changes. For example - 

Tariff Classification is a vital first step and the answer to the question of whether or not your goods are going to be affected by these new regulations, and with Tariff Classification, you can rest easy knowing there is no ambiguity or uncertainty as you move forward. After all, the first step to solving a problem is knowing if you have one, and classification from our tenured experts will set you on the right path forward from the very beginning.

Advanced Customs Rulings provide an opportunity for you to ‘lock in’ a ruling for your import ahead of time. With so many things in flux and the regulations being both brand new and potentially just the beginning of a cascade of changes, knowing exactly what your shipment is in the eyes of Customs ahead of time can be incredibly valuable and take enormous weight off your shoulders. 

Tariff Relief is designed specifically to help you deal with things like these new regulations. Discovering that your goods are suddenly 25% more expensive should have you seeking alternative options - and in that effort, we can help. Our Tariff Relief service utilizes our decades of experience to help importers find ways to reduce their costs when shipping internationally in a compliance-focused way. With this service, we review commodities, sourcing, and manufacturing and provide cost-saving solutions, often in response to changes in the marketplace. With Tariff Relief, we help guide you toward an importing strategy that effectively steers clear of any commodity afflicted with origin surtaxes and mounting costs. 

The second perspective is less concerned with this specific situation and more focused on staying adaptable for when the next regulation of this kind arrives. Regulation changes of this type are common, and they can come without warning for any industry, so the better prepared your business is, the better off you’ll be when they arrive. One of the key elements PCB regularly advocates for with our clients is adaptability, and for many importers, that begins with two different trade advisory services:

A Supply Chain Audit can help determine the risks, efficiencies, and profitability of your current supply chain. Being able to quickly and effectively change course or alter your chain in the face of new circumstances is a skill that is vital to the success of an international commercial importer, and a Supply Chain Audit can help you become more adaptable and light on your feet.

A Free Trade Agreement Review can examine your imports through the lens of existing free trade agreements and can help identify and facilitate a change in your supplying countries that not only avoid the heavy surtaxes of Chinese goods but can help insulate you against future challenges as well. 

Of course, this is just the beginning of what we can do to help your business now and into the future. For a full list of our services, be sure to visit our Trade Advisory Services page and get in touch with one of our trade advisory experts today. 

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Tariff increases, surtaxes, and intrusive regulation changes are part of international trade. Their causes are myriad, and who they affect can be sweeping or incredibly narrow, but with a good plan in place and an expert at your side, you can flourish even under the most chaotic of circumstances. For assistance with these specific changes or any that might be coming down the road in the future, please do not hesitate to get in touch with our team today.