Trade Compliance

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Everything You Need to Know About the Steel Safeguard Surtax

Posted October 15, 2018


The Trudeau government last week announced it will be imposing new restrictions on a range of steel imports as part of an ongoing effort to mitigate harm caused by the diversion of cheap steel products from China and other low-cost producers in the wake of the Trump administration’s punitive Section 232 steel and aluminum tariffs levied on “national security” grounds.

Background

The latest move is in addition to countermeasures that have already been implemented earlier this year to restrict the dumping and transshipment of foreign steel and follows an announcement made in August that the government intended to crackdown on “unfairly priced” steel imports in response to concerns expressed by Canadian steel producers that in recent months Trump’s metals tariffs have caused more shipments of cheap steel products to be diverted to Canada from the U.S.

Safeguard Measures

The provisional safeguard measures announced by the Department of Finance will be imposed on imports of “heavy plate, reinforcing bar, energy tubular products, hot-rolled sheet, pre-painted steel, stainless steel wire and wire rod.” See below for a more detailed list of products covered along with applicable HS classification codes.

According the government, the restrictions represent “further steps to prevent diversion of foreign steel products into Canada, and provide relief to steel and aluminum users in specific circumstances that are paying for countermeasures on certain products imported from the United States.”

Imports of the seven products covered by the safeguard action will be subject to a surtax of 25% “in cases where the level of imports from trading partners exceeds historical norms” and will come into force effective October 25.

Such safeguards, the government contends, are allowed in “exceptional circumstances” in accordance with the provisions of Section 55 of the Customs Tariff Act “to respond to increases in imports that may harm Canadian producers and workers.”

The Government has indicated that it has requested that the Canadian International Trade Tribunal conduct an inquiry to determine whether final safeguards are warranted. In the meantime, the provisional safeguards will be in place for 200 days pending the Tribunal’s findings.

Exemptions

The safeguards, Finance claims, “offer a balanced response that will support Canadian producers and manufacturers, while the Government continues to work toward the complete repeal of all U.S. tariffs of Canadian steel and aluminum.” With this in mind, exemptions have been made for the following:

  • Goods originating in and imported from the United States.
  • Goods originating in and exported from Chile, Israel or another CIFTA beneficiary (i.e., the West Bank and the Gaza Strip).
  • Mexico was not awarded a full exemption and is limited only to energy tubular products and wire rod. The Mexican government stated it “deeply regrets” the Canadian decision and vowed to “use all available mechanisms in the North American Free Trade Agreement and the World Trade Organization until we achieve our total exclusion from safeguard measures.”
  • Goods originating in and imported from developing countries which are beneficiaries to the General Preferential Tariff, with the exception of concrete reinforcing bar originating in and imported from Vietnam.

Note: In all cases, to be eligible for these exemptions the goods must both originate in and be imported from the same country.

Documentation

In order to obtain exemption in the case of the above-noted goods, importers must apply for shipment-specific import permits from Global Affairs Canada, which will be valid for 14 days. Click here for information on conditions to satisfy when requesting permits.

Imports of goods that do not have a valid permit, or are in excess of the quantity of an import permit at the time of accounting, will be subject to the 25% safeguard surtax.

It should be noted that Canada’s Duties Relief Program and Duty Drawback Program continue to be available to importers for duties relief, including safeguard surtaxes, paid or owed by businesses that meet the requirements of these programs.

Scope of Goods Subject to the Safeguard Surtax

 

Steel Plate

Carbon and alloy steel plate, in discrete form or in cut lengths, subject to certain dimensional restrictions and exclusions commonly imported under the following 10-digit HS numbers: 7208.51.00.10; 7208.51.00.93; 7208.51.00.94; 7208.51.00.95; 7208.52.00.10; 7208.52.00.93; 7208.52.00.96; 7225.40.00.10; 7225.40.00.20; 7225.40.00.30; 7225.40.00.40; 7225.40.00.50

Concrete Reinforcing Bar

Hot-rolled deformed steel concrete reinforcing bar in straight lengths or coils, commonly identified as rebar, in various diameters up to and including 56.4 millimeters, in various finishes, commonly imported under the following HS numbers: 7213.10.00.00; 7214.20.00.00.

Energy Tubular Products

Carbon and alloy steel energy tubular products, including line pipe, tubing, and casing, for use in the oil and gas and petrochemical industries, finished or unfinished, welded or seamless, having a nominal outside diameter from 2.375 inches (60.3 mm) to 60 inches (1,524 mm) (with all dimensions being plus or minus allowable tolerances contained in the applicable standards), heat treated or not heat treated, regardless of length, wall thickness, surface finish (coated or uncoated), and end finish (plain, bevelled, threaded, or threaded and coupled), in all grades, meeting or supplied to meet American Petroleum Institute (API) 5L, API 5L-B, API 5CT, Canadian Standards Association (CSA) Z245.1, International Standards Organization (ISO) 3183, American Society for Testing and Materials (ASTM) ASTM A333, ASTM A106, ASTM A53-B or their equivalents and/or enhanced proprietary standards, whether or not actually certified or stenciled, whether or not meeting specifications for other end uses (e.g. single-, dual-, or multiple-certified, for use in oil and gas, piling pipe, or other applications). These goods are are commonly imported under the following 10-digit HS numbers: 7304.19.00.10; 7304.19.00.20; 7304.29.00.11; 7304.29.00.19; 7304.29.00.21; 7304.29.00.29; 7304.29.00.31; 7304.29.00.39; 7304.29.00.81; 7304.29.00.89; 7305.11.00.10; 7305.11.00.20; 7305.12.00.10; 7305.12.00.30; 7305.19.00.10; 7305.19.00.20; 7306.19.00.10; 7306.19.00.90; 7306.29.00.11; 7306.29.00.19; 7306.29.00.51; 7306.29.00.59; 7306.29.00.61; 7306.29.00.69

Hot-rolled Sheet

Flat hot-rolled carbon and alloy steel sheet and strip, including secondary or non-prime material, in various widths from 0.75 inches (19 mm) and wider, and for product in coil form, in thicknesses from 0.054 inches to 0.625 inches (1.37 mm to 15.875 mm) inclusive, or for product that is cut to length, in thicknesses from 0.054 inches up to but not including 0.187 inches (1.37 mm up to but not including 4.75 mm), commonly imported under the following 10-digit HS numbers: 7208.25.00.00; 7208.26.00.00; 7208.27.00.00; 7208.36.00.00; 7208.37.00.10; 7208.37.00.20; 7208.37.00.50; 7208.38.00.10; 7208.38.00.20; 7208,38.00.50; 7208.39.00.00; 7208.53.00.00; 7208.54.00.00; 7208.90.00.00; 7211.14.00.90; 7211.19.00.90; 7225.30.00.00; 7226.91.00.00

Pre-painted Steel

Pre-painted flat-rolled products of non-alloy and alloy steel (not including stainless steel) which are painted, varnished or coated with plastics on at least one side, in coils or cut lengths, in thicknesses up to 0.079 inches (2.0066 mm) and widths up to 61.5 inches (1562.1 mm) with all dimensions being plus or minus allowable tolerances contained in the applicable standards, commonly imported under the following 10-digit HS numbers: 7210.70.00.00; 7212.40.00.00.

Stainless Steel Wire

Cold drawn, and cold drawn and annealed, stainless steel round wire, up to and including 0.256 inches (6.50 mm) in maximum solid cross-sectional dimension; and cold drawn, and cold drawn and annealed, stainless steel cold-rolled profile wire, up to and including 0.031 square inches (0.787 sq. mm) in maximum solid cross-sectional area, commonly imported under the following 10-digit HS numbers: 7223.00.00.10; 7223.00.00.20.

Wire Rod

Certain hot‐rolled products of carbon steel and alloy steel, in coils, of approximately round cross section, less than 19.00 mm in actual solid cross‐sectional diameter, commonly imported under the following 10-digit HS numbers: 7213.20.00.10; 7213.91.00.11; 7213.91.00.21; 7213.91.00.31; 7213.99.00.10; 7213.99.00.30; 7213.99.00.50; 7227.90.00.10

Note: The HS numbers shown are for illustrative purposes and may include goods under the listed tariff code that don’t fall within the product definition. Likewise, certain goods may fall within the product definition but may not included in the HS numbers listed.

Still Need More Information?

If you have any questions or concerns about the government’s new safeguard measures or if you are unsure whether your products are covered, please don’t hesitate to contact us.