The Current - Steel and aluminum tariffs hit businesses on both sides of the border

Episode Date: June 5, 2025

<p>Whopping 50 per cent tariffs are now in effect on steel and aluminum imports headed to the U.S. — and that’s causing pain for businesses on both sides of the border. We hear from Canadian and American businesses who say they will survive, but at a cost.</p>

The ocean is vast, beautiful, and lawless. I'm Ian Urbina back with an all new season of The Outlaw Ocean. The stories we bring you this season are literally life or death. We look into the shocking prevalence of forced labor, mine boggling overfishing, migrants hunted and captured. The Outlaw Ocean takes you where others won't. Available on CBC Listen or wherever you get your podcasts. This is a CBC Podcast.

Hello, I'm Matt Galloway and this is the current podcast. Well, it just seems with President Trump, it's, you know, five steps forward and ten steps backwards. And that doesn't help. Ten steps backwards. Ontario Premier Doug Ford was on CNN yesterday blasting US President Donald Trump's newest tariff move, hiking tariffs on steel and aluminum from 25% to 50% effective yesterday. The Prime Minister Mark Carney called Trump's move illogical and unjustified and said his government

is figuring out next steps. Parag Shah is president and co-founder of New Age Products, a manufacturer of steel, garage storage, cabinetry and outdoor furniture. He's in Toronto. Parag, good morning. Hey, good morning, how are you? I'm okay.

What did you think when you heard that the US president was doubling tariffs on steel going into the United States? Well, I mean first of all, we weren't too surprised by it because he had said a few times Recently that he was looking at increasing the tariffs from 25 to 50 percent You know, sometimes you have to take what he says with a grain of salt, but also it seems to be a line of thinking he might have had and just decided at the moment to increase them. So we weren't happy about them, but we're preparing in the background for them for that inevitability in our view. Preparing in the background. The head of the Canadian Steel Producers Association says 50% tariffs to the United States essentially

means that market is essentially closed. How is this going to impact you? Well, we build steel derivative products. What that means is it's not the commodity, but it's products that are built out of steel. Specifically garage cabinetry, outdoor kitchens. So obviously, this is going to have a cost impact on those items. But it's one of the items in the cost stack, similar to the Canadian dollar, shipping, logistics, storing of the goods.

So that part of the cost stack obviously has increased with the tariff. But the way we look at it as a company who produces these types of goods is we always have to have a unique selling proposition beyond just the price of the product. If we're just selling the product for the price and that's our value proposition to the customer, when something like this happens, we're not going to be able to succeed. So we have to always continue to provide value in terms of product innovation, the way we deliver the item, the services we offer our customers. Although there might be a cost increase, we're going to do our best to deliver the best possible

solution to a customer every day, and that's why they would purchase our goods. How much of your business relies on the US market? About 70 to 80% of our sales are in the US. That's considerable. And you, and you think those people will be willing to eat a higher cost for the product that you're creating? I think that we're going to do our best to mitigate the cost increase as much as possible.

Um, by using all the different levers that we have, however, uh, we believe in our product, and we've been dealing with tariffs since 2018, when there was a steal and tariff increase at that point in time. Over time, as we import parts from various parts of the world, there's tariffs that happen.

During COVID, when freight rates went up, 5X on goods from coming. Effectively, that was a tariff because all of a sudden the container cost went from $5,000 to $25,000. So it costs much more to import a part into the country. So dealing with cost adjustments is always going to happen in a steel derivative product industry. It's just about how you manage it, how you talk to your customers, and how you continue to deliver an excellent experience. Did you not, you mentioned the 2018 terrorist. Am I mistaken in thinking that you had to deal with that

in part by not closing one of your factories? Is that right? No, not for us. We didn't have to close anything, but it did affect, obviously obviously the cost of the goods that we were selling. Okay. So in light of that, you mentioned American customers and talking to American customers.

I mean, one of your customers is an American NBA team, the New Orleans Pelicans. What are you doing with them? How are you talking to them about what's going to happen? Well, first of all, they've been very supportive and said, hey, if you guys need any help, let us know. But that's more of a marketing partnership that we utilize to grow our brand because we're one of the largest producers of outdoor kitchens in the world and we're a brand that not many in the US have heard of.

That relationship is really more marketing driven, but frankly, they've been very supportive, very helpful introducing us to people within the industry if we need more help on sourcing or manufacturing goods within the US. What do you want from the federal government here? The prime minister has said the government will retaliate if negotiations with the US

to end these increased tariffs fail. And there are calls for the government to act right now. I mean, the conservative opposition, but also Doug Ford, the Premier of Ontario, has to do something now. I want a balanced approach. I think we have to remember that in 2018, when the US imposed the tariffs on steel, I think the stat was they gained 1,000 jobs in production,

but lost 75,000 jobs in other industries that require steel. So just increasing tariffs across the board, retaliating, doesn't necessarily mean a net benefit for the economy. So I think the approach has to be very balanced, very thoughtful. We don't produce a lot of the goods here that require steel. So just increasing tariffs will increase costs. And one of the things that people have to understand is in the derivative industry, it's not about using steel or not using steel.

It could be using steel or using another material, which means that there's not going to be an increase of steel use. It would actually just mean like for instance, we sell cabinetry. The decision might not be to use steel or not steel. It might be to just buy a wood cabinet or a plastic cabinet. So it's not a linear relationship. It's not a binary decision. So I just hope the government is thoughtful about what they do, take a balanced approach and understand that one solution does not fit all. The economy is very complex. Just very briefly, you're confident that you can survive this,

that you can adjust and make it through this? I mean, we've been dealing with it for 20 years, so I'm pretty confident. We have a great product, and what I would say is just provide a situation in Canada that fosters innovation so we can win as Canadian companies. And that's the best thing the government can do to support us is continue to allow companies to innovate. So we don't have to win on price, we win on product.

Parag Shah, we'll leave it there. Good to talk to you. Thank you very much. Thank you. Bye. Parag Shah is the president of New Age Products. He was in Toronto. American businesses are also feeling the impacts of these steel tariffs. Rick Huther is the CEO of the Independent Can Company. He is in Belle Camp, Maryland, just outside of Baltimore. Rick, good morning to you. Good morning.

The Wall Street Journal called these tariffs a kick in the can. You make these cans. Tell us a little bit about Tinplate, which is what you manufacture cans out of. Okay, well, our company is 96 years old and we're a family business. We have four plants in the United States, two in Ohio, two in Maryland. And we are 100% Tin Plate versus no aluminum

in our operation. We make specialty cans, decorative cans, popcorn cans, lighter fluid. We also ship a substantial number of cans into Canada and we also print for a Canadian company called Ideal Can for syrup products. So we right now use tin plate primarily made overseas because the domestic mills only have a capacity for about 25% of the tin plate consumed by the can industry for all of the sanitary, paint cans, general line,

chemical cans, and so forth. What is a 50% tariff going to mean for your bottom line? It, at this point, the tariff will be passed on to customers. It will be passed on at a percentage of the steel content of any particular can. And our customers are demanding transparency of what this tariff is compared to pre-tariff. So we are breaking out the tariff effect for all customers

and either including it in the price if they ask it or actually having as a separate line item on invoices. So we're trying to be very transparent. We do not make money on tariffs. We just wanna make sure we service our customers well and grow the market and protect our food safety in the United States However, customers responded to what you're doing I mean not just increasing the prices but as you've said being

Transparent and posting the pre tariff price along with the new price with the added tariff amount so they can see what's going on here How have they responded yet? They've been advertised at such a high level that there is zero surprise I think that customers are learning more about It's been advertised at such a high level that there is zero surprise. I think that customers are learning more about the content of their packaging, how much of it is domestic, how much of it is imported, and the percentage of the content in their can. So we have some things that are tremendous volumes where the steel content could be up

to 70% of the can. So if there's a 25% tariff, it's about 16% on the cost of a can. If it's a 50%, then it's 12.5% on the can. Over the last several years, because of tariffs, we have absorbed a good bit of those over the last, since 2018-19 when it first came in, and we absorbed some in March when that was imposed. Today, we've absorbed as much of the tariff effect that we can possibly take. So tariffs will be passed through. Can you understand at any level what your president is doing?

In theory, I think we need a strong steel industry in this country. I'm not sure he understands tinplate, which is a very unique product in the steel industry. It's only about 2% of the global steel production worldwide, and in America, it's only about 1% or even less of 1% of the production. And since the tariffs came in, in 18, 19, we had 13 tinning lines in the United States. Today we have three. 70% of the tin plate production has been idled or shut down permanently in the United States.

So I'm not sure that the administration understands the uniqueness of this particular steel product. So he says that these tariffs will force steel to be made in the United States. As you understand it, is that possible? I think all steel products for automobiles, for structural, for lots of steel applications, cages, many things. Yes, there is plenty of capacity to be absorbed in the United States, and tariffs can force that back to domestic production.

Tin plate, on the other hand, is not that. It would take more than a year to bring the idled capacity back up to operate, if it ever will operate again, and it would take four to five years to build a tinning operation that would be globally quality and specification competitive. So for Tinplate, it's not true. For other steel products, it's absolutely true that we could bring things back. Although the damage you can do from the cost of products compared to global is interesting because in the United States our

steel cost is in many cases more than double the global standard price now. So what's it due to a variety of products downstream? Let me ask you just a couple of quick things before I let you go. One is on your website, it says proud US manufacturer. You worried about the future in terms of staying in business as a US manufacturer? We, and in our strategic plan, our government was listed as one of our high risks.

We will thrive and we will survive. We are flexible, we are able to make different things that today we do not make. We're a specialty company. We're not a beverage. We're not sanitary. So we will survive. Will the headcount be 400, which it is today? Maybe not. We make military spec cans. They require U.S. production of steel and units. So I think it will survive. It may not have an opportunity to grow as we have predicted. I have to let you go, but just very briefly, what would you say if you were able to pick

up the phone and call the president, what would you say to Donald Trump? Please carve out tinplate as an exemption or where they had specifications that are not produced here, have them exempt from or minimize the tariff effect of those items to allow the marketplace to absorb the change and the shock of the changing world. Rick, it's good to talk to you. Wish you the best of luck and thank you very much. Thank you. Have a safe day. And you, Rick Huther is the CEO of the Independent

CAN Company in Belkamp, Maryland. This has been The Current Podcast. You can hear our show Monday to Friday on CBC Radio 1 at 830 AM at all time zones. You can also listen online at cbc.ca slash The Current or on the CBC Listen app or wherever you get your podcasts. My name is Matt Galloway. Thanks for listening. For more CBC podcasts, go to cbc.ca slash podcasts.