COVER STORY WHEN CANADIAN AND U.S. REPRESENTATIVES SIGNED THE United States-Mexico-Canada Agree- ment (USMCA) on October 1, most Canadians breathed a sigh of relief. The successor to NAFTA, USMCA – also referred to as NAFTA 2 – was the product of long, difficult and often acrimonious negotiations and at various stages it looked as if a deal might never be reached. But Canadian relief at the signing of USMCA was short lived, at least in sectors such as construction. The U.S. imposition of 25 per cent tariffs on Canadian steel products and 10 per cent tariffs on Canadian aluminum products was still in place, as was the tit-for-tat Canadian retaliatory response. It also didn’t help that shortly after, Canada announced a new provisional safeguard tariff on seven steel categories from all other countries – a move aimed at hindering the threat of dumping. On October 25, the 25 per cent surtax went into effect. While some observers have suggested the initial tariffs could come down later in the year when the USMCA is formally ratified, that remains more hope than certainty, especially with the recent Canadian surtax. The latter aims to reduce or eliminate the “diversion effect,” where third-party countries cut off from U.S. markets compensate by diverting exports to other countries like Canada. This can glut the market and lower prices in the importing countries. But according to some industry insiders, that glut has not been happening, and the introduction of the new tax could ultimately be devastating to some players in the construction industry. “Right now, there isn’t dumping or heavy spikes of inputs coming in on all products,” notes Ed Whalen, president and CEO of the Canadian Institute of Steel Construc- tion (CISC). “With the world safeguards put in place, [it] will force us back to the U.S., which is really against what the government wants us to do.” Whalensaysthesafeguardscouldraise steel prices from non-U.S. suppliers to the same level as those of U.S. suppliers, TRADE TRAVAILS The ramifications of steel tariffs on the Canadian construction trade BY ANDREW BROOKS 18 | Builders' Digest Quarter 3 2018