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Canada's steel town still nervous despite tariff reprieve

Reuters  |  HAMILTON, Ontario 

By Allison Martell

HAMILTON, Ontario (Reuters) - A temporary exemption from U.S. tariffs is little comfort to the Canadian city of Hamilton, coping with months of uncertainty as U.S. has threatened a potentially devastating 25 percent duty unless the North American Free Trade Agreement is renegotiated.

Canadian negotiators are weighing the interests of the relatively small sector, responsible for about 22,000 direct Canadian jobs and C$9.0 billion ($7.0 billion) in U.S. exports, against those of bigger industries like and politically influential groups like dairy farmers.

"I don't think we're at the end of it. Now it's being used as leverage," said Hamilton "Trump is putting a lot of pressure on everybody."

Hamilton, population 700,000, has pushed to diversify its economy, with better transit links to and affordable homes that are attracting families priced out of Canada's biggest city. A C$139-million project is underway to clean up coal tar that contaminates the harbor and condos are replacing once empty downtown storefronts.

When Canadian escaped tariffs in 2002, the duties had diverted some cheap into In recent years, a global glut has made it difficult for Canadian mills to compete.

But ArcelorMittal's mill, coking and finishing operations at Stelco, and a collection of smaller operations still directly employ 10,000 people in Hamilton.

The North American industry is heavily integrated, with raw materials, and parts crossing the U.S.-Canadian border several times before a finished product such as a vehicle or refrigerator is sold to consumers. About 65 percent of the Hamilton port's tonnage is ore and coal used to make

Hamilton, the port president, said one company called after Trump first signaled the tariffs on March 1, when it was unclear whether would be exempt at all. The firm wanted to know if the agency might be willing to take over management of its warehouse and find different cargo to fill it. Keanin Loomis, a former lawyer, is part of a new generation in the city who have never worked in a mill. But like much of the city, he has a personal connection to steel, a retired from the mill.

If a tariff is imposed, Loomis expects imports to lower domestic prices, potentially driving some employers south of the border, where tariffs are expected to boost prices.

Loomis said high labor costs, environmental regulations and a looming carbon tax already make it difficult for the industry to compete.

"This could be the thing that puts it over the edge," he said.

The city's United Steelworkers Local 1005 has only about 550 active members, down from more than 13,000 in its heyday in the 1970s.

The local union represents workers at Stelco, but not Dofasco, which never organized. Since 2004 it has weathered the closure of Stelco's Hamilton mill, Stelco's two trips through bankruptcy protection, and two new owners.

Members at another plant, North America, have been locked out for almost five years over proposed wage and benefit cuts. And union sees choppy waters ahead.

"With Trump being in there, it's probably never going to be over," he said.

The has vowed to continue lobbying until the threat of duties disappears. Pressed on Trump's decision to link the exemption to NAFTA, Canadian said on Thursday that considers the two issues to be totally separate.

"I think they should get some more backbone," Steve Kajganic, a retired veteran of the mill and a second-generation steelworker, said of the "Stand up for our country, instead of selling it out."

(Editing by and Jeffrey Benkoe)

(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)

First Published: Mon, March 12 2018. 10:27 IST