Industry Minister Melanie Joly says Canada can do more to counter foreign steel dumping, as U.S. tariffs batter the Canadian sector and make it vulnerable to being flooded by cheap imports from overseas. 

Canada has put 25% tariffs on Chinese steel, and in July tightened its tariff-rate quotas to further restrict imports from countries with which it doesn’t have a free-trade deal. The government also added a 25% surtax on steel products from any country, except for the U.S., that contain steel melted and poured in China. 

“But I’m also very much aware that we have to do more,” Joly said August 28 in an interview as she wrapped up meetings in Europe. “We have to go further and I think this is an ongoing conversation, not only with steel CEOs but also amongst us within the government.”

Joly said she’ll have discussions upon her return to Ottawa, and the government’s policy response will be based on steel plants’ business decisions and data about the trade war’s impacts. 

At the same time, Canada is still pushing for relief from steel tariffs in trade talks with the U.S., she said.

The Canadian steel industry says it has significantly reduced shipments to the U.S. and been forced to shed jobs. For some producers that relied on the U.S. market, U.S. President Donald Trump’s 50% tariffs on foreign steel have been a disaster. Algoma Steel Group Inc., for example, reported a large second-quarter loss, and is applying for federal loans. Its share price has tumbled about 50% this year. 

Prime Minister Mark Carney said last week his government will drop retaliatory tariffs on a long list of U.S. goods, but it’s keeping 25% import taxes on U.S. steel in place. 

However, there are loopholes that allow large volumes of U.S.-made steel to come in tariff-free, according to the Canadian Steel Producers Association, which wants to see those closed and their industry protected. 

Lourenco Goncalves, chief executive officer of Cleveland-Cliffs Inc., which bought a Canadian steel operation last year, has urged Carney to build a tariff wall around the industry. “Canada can fix themselves. They import an amount of steel into Canada that’s equivalent to the size of the Canadian market,” Goncalves told analysts last month. “The very first thing they need to tell foreigners, get out of my market.”

Joly said much of the Canadian sector has evolved to ship steel to U.S. automakers, and tariffs have shut off access to that market. The government is focused on helping companies pivot to serving other industries — especially defense — and will assist them with financing in the meantime, she said.

“We’re living in a much more dangerous world and Canada cannot prevail in this world if we don’t have a strong industrial base,” she said. It’s not only about jobs, “it is also a question of national security and for the state to be able to have the right assets should times become tougher.”

While in Germany, Joly held a flurry of meetings including with Lufthansa Technik AG, Siemens Energy AG, Airbus SE, Infineon Technologies AG and Bayer Pharma AG. The minister said she’s aware of the “humongous” task of “creating new trade routes that have not necessarily been developed enough in the past decade,” a period during which she held cabinet roles in Justin Trudeau’s government.

Diversifying Canada’s trade is a tall order, as it sent around 75% of its merchandise exports to the U.S. last year. But Joly said she’s been struck by how the “reckoning” that’s occurring in Canada this year is also happening across Europe.

“A lot of companies, which is interesting to note, are right now doing strategic reviews and they’re adapting to complicated geopolitics,” she said. “That’s where I think Canada has an advantage as we are seen as a reliable country with free trade agreements that we respect around the world.”