THE STANDING SENATE COMMITTEE ON FOREIGN AFFAIRS AND INTERNATIONAL TRADE
EVIDENCE
OTTAWA, Wednesday, October 29, 2025
The Standing Senate Committee on Foreign Affairs and International Trade met with videoconference this day at 4:15 p.m. [ET] to examine and report on such issues as may arise from time to time relating to foreign affairs and international trade generally.
Senator Peter M. Boehm (Chair) in the chair.
[Translation]
The Chair: Good afternoon, honourable senators. My name is Peter Boehm. I’m a senator from Ontario and the chair of the Standing Senate Committee on Foreign Affairs and International Trade.
[English]
I invite those participating in the meeting today to introduce themselves.
Senator Adler: Charles Adler, Manitoba.
Senator Pupatello: Sandra Pupatello, Ontario. Thank you.
Senator McNair: John McNair, New Brunswick.
Senator LaBoucane-Benson: Patti LaBoucane-Benson, Treaty 6 territory, Alberta.
Senator Ravalia: Welcome. Mohamed Ravalia, Newfoundland and Labrador.
Senator Wilson: Duncan Wilson, British Columbia.
Senator Coyle: Mary Coyle, Antigonish, Nova Scotia.
Senator Dean: Tony Dean, Ontario.
[Translation]
Senator Hébert: Martine Hébert from Quebec.
[English]
The Chair: I note that Senator LaBoucane-Benson and Senator Pupatello are joining us today, one as an ex officio member and one as an observer. All senators, of course, are welcome to ask questions as we move along.
I welcome all of you as well as those watching us across the country on Senate ParlVU. Colleagues, today we are meeting under our general order of reference to discuss the Canada‑United States-Mexico Agreement, or CUSMA, and Canada’s trade relationships with the United States and Mexico; that is the title. We have had Cameron MacKay here as a witness, who is our Ambassador to Mexico.
Today, for our first panel, it is a great pleasure for me to welcome, by video conference, Kirsten Hillman, Ambassador of Canada to the United States. Welcome, ambassador, to the committee.
From Global Affairs Canada, we are also joined by Martin Moen, who is no stranger to this committee. Martin Moen is the Associate Assistant Deputy Minister of Trade Policy and Negotiations.
Before we hear the ambassador’s opening statement and proceed to questions and answers, I ask everyone present to please mute notifications on your devices and pay attention to the suggestions on the card in terms of the placement of your earpiece and microphone. This is for the protection of our technical staff, especially our interpreters.
Ambassador, we are ready to hear your opening remarks, which will be followed by questions from senators.
Kirsten Hillman, Ambassador of Canada to the United States: Thank you, honourable senators and honourable chair, for the opportunity to appear before you virtually today.
I would like to start by thanking all of you for the work you do to support the Canada-U.S. relationship. I’ve had the privilege of welcoming many of you to Washington or meeting you in other fora to discuss how we can seek to advance and enhance this vital relationship between our country and our neighbour who is our most important partner.
Today, as the chairman said, we’re discussing Canada-U.S. trade and the upcoming review of CUSMA, or the United States‑‑Mexico-Canada Agreement, or USMCA, as they call it down here.
The Canada-U.S. trade relationship is, without question, fundamental to Canada’s economic well-being. It is also, in my view and experience, very important to Americans. Let me share some statistics with you to support that fact.
The U.S. is by far our top trading partner. We sold almost $600 billion worth of goods to the United States last year, representing 75% of Canadian exports.
[Translation]
Canada is also the top destination for American exports. Americans sold over $600 billion worth of goods and services to Canadians in 2024.
[English]
All told, this represents about $3.4 billion worth of goods and services crossing our border every single day.
These stunning figures are a direct consequence of a relationship that has long been anchored in predictable, free and open trade. But, as you know, recent developments have altered the terrain. The U.S. administration has fundamentally changed its approach to trade with all countries, including Canada.
Several sectors are facing U.S. section 232 national security tariffs — steel, aluminum, automobiles, copper and wood products, among others — and it’s affecting Canadians across the country.
[Translation]
For our country, this American policy shift means that we’re breaking from the decades-long progression towards deeper and deeper economic and trade integration. There’s no question that this shift is causing disruptions. In my discussions with businesses on both sides of the border, I’m hearing that the tariffs are targeting many important sectors and threatening a number of other sectors. They have disturbed supply chains, inflated costs and introduced uncertainty.
[English]
For all of these reasons, we have been working with the U.S. administration to find a path forward to address these tariffs and to promote a shared approach to shared challenges. Prime Minister Carney met President Trump earlier this month, which led to an acceleration of those discussions. Minister LeBlanc, the Clerk of the Privy Council and I have been meeting very frequently in recent weeks with the U.S. Trade Representative, Ambassador Jamieson Greer, as well as U.S. Commerce Secretary Howard Lutnick and others here in Washington.
We have been making the case that trade with Canada contributes to U.S. resilience and that Canadian imports do not threaten U.S. national security or the economy of the United States, but rather enhance both.
As you know, last week President Trump called for a pause in these negotiations. Important work has been done and Canada stands ready to pick up and build on that work when the U.S. is ready to move forward again.
[Translation]
We’re also steadily preparing for a significant milestone, meaning the Canada-United States-Mexico Agreement, or CUSMA, joint review. As a result of CUSMA, total trilateral trade in goods and services has increased 35% since its entry into force in 2020.
[English]
When we’re thinking about tariffs, it is also important to recall that goods that are not covered by the section 232 tariffs and that do comply with CUSMA rules — which is the vast majority of Canadian exports to the United States — continue to benefit from tariff-free access to the U.S. market.
[Translation]
This review is a planned and deliberate process for CUSMA. It’s an opportunity to review the agreement’s operation and ensure that it remains fit for purpose.
To inform our approach and in light of the changed trade landscape, Global Affairs Canada has launched a second round of public consultations through the Canada Gazette. We’re seeking to refine our understanding of what Canadian businesses are experiencing and how we should proceed.
We’ll continue to engage with stakeholders across the country, including industry, labour organizations, provinces, territories, Indigenous organizations and civil society. We’re listening carefully and considering all angles. These conversations are key to shaping our approach and defending and promoting Canada’s interests.
[English]
The United States and Mexico have also launched their own domestic consultation processes to inform their positions. We are now approaching this review process, and we are doing so in a clear-eyed and pragmatic manner. Our priorities are to keep the review as targeted as possible and to seek a prompt renewal of the agreement while securing preferential market access and a stable, predictable trading environment for Canadian businesses and investors. In closing, honourable senators, our trade relationships — including, of course, with the United States — are at a pivotal juncture. We are meeting this moment, and we will continue to meet this moment. We stand ready to work with our CUSMA partners to advance our shared economic security and prosperity in North America. Thank you. I look forward to your questions.
The Chair: Thank you, ambassador. I’d like to recognize that Senator Gerba of Quebec and Senator Al Zaibak of Ontario have also joined our meeting.
[Translation]
I wish to remind members that you’ll each have a maximum of three minutes for the first round. This includes questions and answers.
[English]
Therefore, to members of the committee, I would encourage you to be concise with your questions. As I have said, you will have three minutes, so please not too much of a preamble and let’s make sure that the ambassador and Mr. Moen have enough time to answer your questions. If we have enough time, we will move to a second round.
Senator Ravalia: Thank you, Your Excellency and Mr. Moen, for being here today.
Ambassador, I wonder if you could outline, in your opinion, the best strategy for handling the tough trade policies on a go‑forward basis with the United States at this particularly volatile time, beset most recently by the friction created by the infamous commercial. Thank you.
Ms. Hillman: Thank you for the question. I think that really — and I say this to my team here in Washington and around the United States at all times — Canada has a very specific mission in the U.S. If we are talking about trade, then our very specific mission is to seek tariff relief for those industries that are affected by these section 232 tariffs in order to preserve and maintain our stable trading environment — or return to a more stable and predictable trading environment — with our partner, the United States.
There are policies pursued in Canada: building up more domestic use of our own resources and expanding our trade relationships with other countries. Those are also very important, but for us here in the United States, the main thing is to keep our eye on the ball and bring forward to the Americans — which is not that hard to do — the way in which a reliable, predictable and dependable partner just to the north is greatly to the benefit of the United States.
The United States is stronger, more secure and more prosperous having us here.
That doesn’t mean that the path from here to there is going to be easy because the world has changed. President Donald Trump and his administration believe in re-establishing a different tariff norm. It is a tool important to him. That is a fact. We are working with that fact.
But we are going to be able to work with it in such a way that creates a new path for our two countries that builds on the areas in which we can work well together, that creates resilience for the Canadian economy, that makes sure we are able to weather this storm and that gets us back to a place with our partner that is a little more predictable.
Senator Ravalia: Thank you.
The Chair: I wish to acknowledge that Senator MacDonald of Nova Scotia has joined us.
Senator Coyle: It is great to see you again, ambassador.
Given where we are today, what do you see as the priority and the concrete next steps to getting that trade relationship and those trade negotiations back on track? What are those steps? Who are those players?
Ms. Hillman: In the trade space, the players here in the United States and the ones who have been empowered by the President to work with us on this are the U.S. Trade Representative, Ambassador Greer, and his team; Commerce Secretary Lutnick and his team; and, to a certain extent, Treasury Secretary Scott Bessent and his team. And then depending on some of the issues that we’re talking about, it could be the Secretary of Energy. There could be other players who come to the table. That is the core group.
How do we do it? One thing I would like to say to everybody is our relationship with the United States is multi-faceted. I did a check-in with my team this afternoon. Just so everybody knows, over the course of the last four or five days, our entire team here has been continuing to work at senior levels with all of their counterparts, whether they are at the Department of State, the Department of Homeland Security, the White House, the Department of Energy or the environment department. All of these are still happening, including right up to the most senior levels.
This relationship is strong and resilient. There is so much we are doing together. The channels of communication are open, and we will get back to it because it is in the interests of Americans and it is in the interests of Canadians. That will ultimately guide the day.
Senator Coyle: It may be too early to ask this question, but for the review you mentioned that was announced on September 19, are there any early reports that you can give on the findings so far?
Ms. Hillman: You mean the public comment on the CUSMA review?
Senator Coyle: Yes.
Ms. Hillman: We do a bit of a tally every week. There are a number of things that Canadians are saying.
First and foremost, this resonates with what my team and I hear across the United States from American businesses and lawmakers as well. The first thing people say is, “Make sure we preserve this privileged trade relationship between our two countries. It is important to the prosperity of our community and to the efficiency and competitiveness of our company.” People are saying that in the United States to me almost every day, and Canadians are most certainly saying it to us as well.
Senator Coyle: Thank you.
[Translation]
Senator Hébert: Ambassador Hillman, it’s good to see you again. I was fortunate enough to work with you and your teams for a period of time in my previous life. Welcome.
When the first wave of tariffs hit in 2019, we heard many people speak out. You said that your teams are working hard, and we know this, with officials from different states, with stakeholders and with Canada’s allies across the United States. Do you feel that the influence of these movers and shakers, who greatly contributed to getting us out of the first wave of tariffs in 2019, may help us again? Or are we nowhere near the same situation as before, in terms of the influence of these people who could speak with Canada?
Ms. Hillman: I believe that, first and foremost, we should work with the President and his team. Of course, the President and his team set the policies. The President has a great deal of confidence in his tariff policy because he finds that it works for him from an economic standpoint, but also from the standpoint of negotiations on a multitude of issues.
So, naturally, we’re focusing on him and his team and on the people around him. That said, his advisors and entourage include certain senators, governors and business leaders whom he greatly respects. It could also be good for us to find ways to connect with these people, so that they can learn all the important facts, should they ever meet with the President. That way, the President would know how they see things, and hopefully they see things in a way that supports our arguments.
However, I believe that the situation is different from last time. People are telling us this and we can see it clearly. The person calling the shots in the United States right now is clearly President Trump. We’re engaging with him quite effectively at this time. The Prime Minister has established a strong and open relationship with him. This is key.
Senator Gerba: Thank you, Your Excellency. It’s always good to see you again. We have many memories in Washington. I imagine that this can’t be easy for you. We offer you our wholehearted encouragement in this work, which certainly isn’t plain sailing.
To follow up on Senator Hébert’s question, do American lawmakers and members of Congress really have a say in the President’s decisions? That’s my first question.
I really wanted to hear your thoughts on my second question, which concerns the approaches taken by Mexico and Canada in terms of trade and diplomacy regarding tariffs. Some observers have described Mexican President Claudia Sheinbaum’s approach to the American tariffs imposed by President Trump as cautious and measured. Do you think that this approach has paid off? Do you think that Canada could take this approach and avoid provoking President Trump?
Ms. Hillman: First, thank you, senator. It’s a pleasure to see you again as well.
I believe that, yes, President Trump really likes to surround himself with different people who provide opinions, information and facts. When I saw the President, I noticed that he asked many questions and sought out opinions and advice from a variety of sources. This means that some people in Congress are allies who have the President’s ear. This doesn’t mean that he’ll follow the advice of any particular person. He listens and makes his own decision.
In terms of our approach to the United States, Mexico or other countries, I believe that each country is trying to find an approach that works for their country. Mexico’s issues with the United States are different from our issues. They have a great many issues. In my opinion, the most challenging issues aren’t related to tariffs. They concern national security, the border and drugs. The United States is putting tremendous pressure on Mexico in these areas. For us, the most significant and challenging issue is tariffs. As a result, we’re choosing a response that reflects our priorities and our discussions with the Americans. It’s different for each country.
[English]
Senator Dean: Thanks for joining us today.
I have two quick questions. Can you talk about the impact of Canada’s deferral of the digital services tax, or DST, as well as what that bought us and whether or not it is possible it may be back?
Second, do you think that Canada’s relatively incremental approach in terms of taking a position on Palestine could be a factor in these talks, depending on how quickly those might intensify?
Ms. Hillman: On the DST, I think it was an issue that was of interest and a priority for the President but became a flashpoint — or accelerated, maybe I should say — quite quickly in his mind. The solution we found or the decision we made was important to be able to maintain a constructive conversation and relationship with the President.
It is something that has contributed to an overall atmosphere between our leaders that is constructive and, I think, ultimately very important for Canada.
As to the rest of the legislation, those questions are really not for me as the Ambassador to the United States.
On Canadian foreign policy choices, whether it be Palestine or others, my perception here in the United States is that it is important to talk to our American colleagues about our position on issues. It is important to give them notice of our perspective. A “no surprises” kind of approach is important. But they are very able to recognize that even their closest partners have different views on key issues that are very complicated in this world. From what I have observed, that can lead to some frank conversations but hasn’t really spilled over from a foreign policy domain into an economic domain.
Senator Wilson: It is good to see you again, ambassador. Thank you for the work that you do every day in Washington on behalf of Canadians.
Obviously, hailing from British Columbia, softwood lumber is a very important issue to us. You’ve probably heard our premier’s frequent refrain, saying that Russia has more favourable treatment on softwood lumber into the United States than Canada. It is clearly a priority.
From what we were seeing and reading, prior to the pause we are in right now, it was looking like a deal on aluminum, steel and energy might be in the offing. What are your thoughts on the likelihood of an agreement in the near term in relation to some of the other priority sectors, like softwood lumber and autos?
Ms. Hillman: Thanks, senator. It is nice to see you too. That’s a very important question, and it’s very important to provide some sort of context around the discussions.
First, to be very clear, Canada is seeking to alleviate, remove, reduce all of the section 232 tariffs or other duties that are on Canada now. That includes forest products, softwood lumber, steel, aluminum, automobiles and other products. We’re working on all of it, and we’re raising all of it. On softwood lumber, I can say to you quite clearly there is not a single meeting that we have with the U.S. Trade Representative where we do not assert and argue that this has to be dealt with and dealt with quickly for all of the reasons that we know.
In the conversations that have been progressing well in recent weeks, the United States expressed to us the desire to start with a few issues and try to move those along, while not jettisoning the others, but maybe accelerating conversations on some of them first and moving the others in afterwards. They have brought to the table steel and aluminum.
We met them in that place and talked to them about steel and aluminum. But, in doing so, we never abandoned what we want to see on softwood lumber and what we’re looking for on autos.
In the way that this has been characterized or discussed publicly, it may have been lost that one is not addressed to the exclusion of the other. That’s not what is happening. It’s more a question of sequencing, at least in the U.S.’s eyes. The U.S. is saying, “We would like to sequence it this way.” Quite frankly, Canada wants to get as many points on the board as fast as we can. We will do so by meeting them where we are. But softwood lumber is, as I say, always part of the discussion.
Senator Al Zaibak: Good to see you again, Ambassador Hillman. I echo my honourable colleagues’ appreciation of your work.
My question relates to President Trump’s recent announcement that he is terminating all trade negotiations with Canada following the airing of an anti-tariff advertisement funded by the Ontario government and reportedly seen as critical of U.S. policy.
Could you please update the committee on how those negotiations were progressing before this disruption? What, if any, channels of communication remain open with Washington since that announcement, in addition to the other channels you have mentioned earlier?
Ms. Hillman: Thank you, senator. It’s nice to see you.
Since the Prime Minister’s visit earlier this month, we have had much more intensive discussions, essentially, almost daily for a couple of weeks. As I say, our focus in those discussions has been on the section 232 tariffs because that is where the Canadian industry and Canadians are being most seriously affected, as well as the duties on softwood lumber.
We did make some important steps forward. We did. We were trying to work out the contours of a first step in an agreement between Canada and the United States and what it could look like. We were exchanging views on that, and we were putting those views on paper.
We still had gaps in our different perceptions of what would make a good deal. We weren’t there yet, but we were working on narrowing those. We had certainly succeeded in narrowing some of them.
There is still work to do. I don’t suggest that we were on the verge of an arrangement, but we had made more progress, in my opinion, in those weeks than we had in a very long time.
In terms of the channels of communication that remain open, there are many. As I think was reported today, the Prime Minister had some exchanges with President Trump in Asia. At the very top, those channels of communication remain open.
I have had exchanges here with a number of my contacts in the administration. My team has also been having contacts. They’re not expressly on the trade negotiations because people have been advised by their leader that it is on pause right now, but we have a lot of different things that we can talk about. There is also just the effort of checking in and making sure that those relationships stay healthy and strong.
Senator Adler: Ambassador, this is not a question that I’m happy with, but it is a question that I think the public is asking. Is the U.S. administration serious about destroying the automotive industry in this country?
Ms. Hillman: Senator, I don’t believe that the U.S. administration is interested in destroying the Canadian auto sector. I would look to what the President has said publicly most recently in the Oval Office, where I think he said that Canada and the U.S. “conflict” and our Prime Minister said “compete” in some areas that are important to the President. And I don’t know his exact words — I’m sorry — off the top of my head, but he also said we will find something that works for us and for both of us.
I believe that to be true based on more technical discussions that I have had here in Washington. It’s a challenging issue for the United States because the President is very focused on auto manufacturing jobs, but I am confident that we will find some sort of a path.
I would also point out that in the section 232 auto tariffs, which, of course, are harmful to our sector, there is a recognition that Canada is the biggest customer for American auto exports by far.
We buy about 70% of the heavy trucks that the United States sells. When we focus on how this relationship is good for the United States and it’s good for American workers, we find avenues that can be fruitful for solutions.
It’s important for us to be strong and to be firm, but also to ensure that we understand the objectives of the President and see how we can demonstrate that in staying close and partnering with Canada, some of those objectives are already being met.
Senator MacDonald: It’s great to see you again, ambassador. I was looking at the cumulative tariffs that both Canada and Mexico are experiencing, and according to the numbers I saw, the overall cumulative tariff rate for Mexico is about 4.7%. The overall cumulative tariff rate for Canada is about 12.6%. Why do we find ourselves being tariffed at a higher rate in response from the U.S. as opposed to Mexico? What do you think the source of this is?
Ms. Hillman: Thank you, senator. I will have to ask my colleague Martin Moen to answer if he can or get back to you, but my understanding is that our average tariff rate is not 12.6%. I think it’s more in the line of 6%, but we can get back to you and get those numbers correct.
Senator MacDonald: Okay.
Ms. Hillman: Coming back to what I said earlier, we have, as does Mexico, the same equivalent tariffs on section 232 products. We have products that are tariffed under the broad‑based IEEPA tariffs, as it’s called. This tariff applies across our economy, but there is a carve-out for anything that complies with CUSMA.
When you put those two things together, 85% of the exports from Canada into the United States are tariff-free. The tariffs lie primarily in the section 232 areas because Canada is well over 90% CUSMA-compliant in the exports it sends to the United States. Those are tariff-free. I don’t want to suggest for one second that where our industries are being tariffed, they’re not suffering. We know they are. It’s difficult for them, and that’s where we are focusing our attention.
We will get back to you on the comparison of the generalized tariff rate, unless Mr. Moen knows the answer right away. That gap is not what I understand it to be.
Senator MacDonald: As was mentioned here, the Ford government has a $75-million ad campaign going at the American administration, and now the British Columbia premier is talking about doing the same thing. I’m certainly of the opinion that’s not necessarily a good negotiating tactic. What feedback are you getting from your American counterparts on these developments?
Ms. Hillman: Thank you, senator. I have not received any feedback personally on a potential British Columbia ad campaign, and the feedback that has been received on the Ontario ad campaign is quite public, so people will have seen that.
The Chair: Mr. Moen, do you have an answer to the question the senator put?
Martin Moen, Associate Assistant Deputy Minister, Trade Policy and Negotiations, Global Affairs Canada: Unfortunately, I don’t have a clear answer, as these are not numbers I’ve heard before. As the ambassador has pointed out, you have the section 232 duties, and you have the so-called IEEPA duties, and in that regard our treatment is the same.
Canada and Mexico face separate duties that are not part of presidential decisions but actually come from anti-dumping and countervailing duty investigations. In the case of softwood lumber, we would argue and are arguing that those duties are unjustified, that we are not causing the injury that is claimed and that the calculations for the duty rates are flawed.
Those duties are different between the two countries because we ship different things and are subject to different kinds of investigations. For example, there are duties on tomatoes from Mexico and not on tomatoes from Canada, and there are duties on softwood lumber from Canada while there’s very little softwood lumber exports from Mexico to the United States and no duties.
That could be it. We will look and see if there’s anything like that, but that’s very hard to calculate because that’s changing all the time. That does not really come from a presidential or other decision. That’s a functioning of the U.S. legal processes and their application to the two different economies. That might be the cause of some discrepancy in the tariff calculations, but those aren’t the kinds of differences that will stem from policy decisions taken as a result of the President’s proclamations. It’s a separate area of concern in some cases for Canada, but it’s a separate area.
Ms. Hillman: After flipping through my materials, as of the beginning of September, the weighted average tariff applied to Canada was 5.6%. We can provide you with an update as of today’s date, but as of the beginning of September, it was 5.6%.
The Chair: Okay, if that can be sent to us in writing to the attention of the clerk, Chantal Cardinal, that would be great. Thank you.
Senator Ataullahjan: Ambassador, I want to thank you for the job you’re doing in very difficult circumstances. We just returned from the Inter-Parliamentary Union, or IPU, meeting in Geneva, and Canada was quite in demand. On our European allies, some are more worried than others about the conversations taking place here in Canada and how we’re dealing with it. Sometimes we could answer their questions and sometimes we couldn’t.
Those were confidential one-on-one meetings we had with different countries, so I don’t want to repeat them, but there was general concern, and this is not the first time. Six months earlier, we were in Uzbekistan and some of the same countries met us and asked us these questions.
I know we have allies, so what are the private conversations that those allies are having with you? When I was in the U.S. earlier, quite a few people walked up to us. When I was crossing at the airport, a man said, “I apologize. We really like Canadians.” Are you hearing that privately also?
Ms. Hillman: Thank you, senator. I have to say that every single day, I hear messages of friendship from Americans. It’s not just the Americans whom I deal with in Congress or in the administration, where I do hear many messages of friendship, and I do think it’s important to emphasize this. There are many people in this administration — as the President has expressed himself — who are very fond of Canada and fond of Canadians, eager to share stories and eager to try to do things together.
The policies being put in place, by the way, apply to the whole world. This tariff policy applies to the whole world, not just us. We feel it from our perspective, but I can assure you that the European Union and Brazil and other countries are feeling it acutely as well.
We have to understand that sometimes these things aren’t specifically targeted just to us. It is a policy that the government here in the United States is putting in place for the whole world.
Another thing I do notice — and I think this is really important — is I don’t think there is a single event that I go to, whether it’s a small dinner or a huge reception, where I don’t have many Americans coming up to me and saying, “I really love Canada. I value Canadians. I lived for a while in Toronto. My daughter went to school in Prince Edward Island. My wife is from Winnipeg.” Whatever the issue might be, people are always seeking to make these personal connections with us and seeking to reinforce these personal connections.
Does that make it easier for some of our sectors and workers who are feeling the pain? Probably not, but for someone like me, where I’m trying to look to the medium and long term, those kinds of feelings and relationships will be important for us to figure out how we will get back on track, where we will get our support from within the United States and how we will proceed moving forward in this relationship as it shifts and evolves.
I am encouraged by that. I hope that Canadians understand that we can find the policies of the government difficult and they can be something making life hard for Canadians, but America is a big place and there a lot of people who have very, very strong and favourable opinions toward us.
The Chair: I am going to use my privilege as chair to ask the ambassador a question. It is something that does not involve tariffs, but it is an important issue. It is about how we in Canada and our successive governments have been an ally in the protection of the vulnerable Porcupine caribou herd and the concerns related to the Arctic National Wildlife Refuge in Alaska, which, of course, straddles into the Yukon as well. The licensing agreements that had been extant under the Biden administration were lifted last week by the U.S. administration.
Ambassador, I know that you have a lot on your plate. I wonder if this is figuring into some of the discussions in terms of work that some in the embassy might do.
I mention it as well because when I was posted in Washington many years ago, it was a big file for us at the time. It looks like it is back.
Ms. Hillman: Thank you, Mr. Chair.
It is back. In the time that I have been here, the first Trump administration was pursuing a change in policy there and did pursue a change in policy there. The Biden administration put the protections back in place. Now they have come off again. This is the nature of that debate within the United States.
We have remained a strong and fierce ally in the protection of that space and in the protection of the caribou. Yes, we have an environment team here. We also have a team working closely on Arctic issues now, probably closer than I have ever seen in my tenure, which is now in its ninth year here in Washington. This is on their agenda as well.
It is a complicated one, because this administration is quite categorical in its view that there should be exploration in that zone. One question raised with me is whether or not there is any economic interest in doing that. That is cold comfort, I am sure, for those who are looking for safeguards.
The question of whether or not there is an economic interest is an important one.
The Chair: Thank you for that answer, ambassador. There are many factors here. One is the price of oil. We have a commitment to our Indigenous Peoples of the North as well to consider.
We will now proceed to round two. In round two, there will be two-minute segments. I have six senators who wish to ask questions.
Senator Ravalia: Ambassador, I would appreciate your opinion on the Team Canada approach.
Should we be speaking in a single voice as opposed to 13 potential voices that may be perceived as inflammatory or adversarial?
Ms. Hillman: That is a complicated question. At some level, the core messages that come from Canada need to have similar tenets. At some level, I believe that they do. The similar tenet is: We are your neighbour, ally and partner. We are not an economic threat, we are an economic enhancement and a security enhancement and we want fair treatment. I think you will see that through line across the whole country. I certainly do when I work with different levels of government and stakeholders here in Washington.
The means that different Canadians choose to express that and the vocabulary they use is different from person to person. I can speak for myself and my team here in Washington. What we find works in the role we are performing here is extremely fact-based, constructive conversations where we try really hard to understand where this administration is coming from — and why — and maybe offer paths to get to the solution they are looking for and the end point they are looking for, which are different than the one they are following, and a path that will be better for Canada. That is what we do.
I find that is effective at the negotiating table and also in our advocacy.
[Translation]
Senator Hébert: We’ve heard some analysts say that sectoral agreements might not necessarily help Canada in the renegotiations, or that they could weaken Canada’s position in the CUSMA negotiations. I would like to hear your thoughts on this issue. I would like to know whether sectoral agreements will help Canada in its future dealings with the United States and in the upcoming CUSMA negotiations.
Ms. Hillman: When you talk about sectoral agreements, do you mean the automotive sector?
Senator Hébert: Actually, what we talked about, meaning aluminum, steel and energy.
Ms. Hillman: First, I would say that we must find a way forward for the sectors affected by these tariffs, sectors where businesses and workers are suffering. We must do this as soon as possible, provided that the agreement works for Canada.
It will take some time to renegotiate CUSMA, anywhere from 12 to 18 months. This won’t happen overnight. In the meantime, some sectors are suffering. In my opinion, we must try to resolve these issues as soon as possible.
Second, these are 232 tariffs. The United States doesn’t consider these tariffs part of CUSMA. These tariffs aren’t part of the conversation because the United States sees them as measures taken for national security reasons. We may not agree on this, but the United States sees these measures as a separate issue from CUSMA. It isn’t even clear whether these measures would be part of the conversation at the table anyway.
Senator Gerba: My question comes on the heels of my first question. I understand that each country has its own priorities. With the CUSMA negotiations scheduled for 2026, how do you think that Canada and Mexico can better coordinate their diplomatic and trade efforts to advocate for their common interests? We do indeed share common interests with the United States when it comes to CUSMA.
Ms. Hillman: Thank you for the question, senator. Clearly, Mexico is a key partner for Canada and is becoming increasingly important. We’re engaging with Mexico now. The Prime Minister visited Mexico, and so did Minister LeBlanc. We often have conversations here in Washington with our counterparts at the Mexican embassy. After all, it’s a North American economy closely intertwined with ours. It’s only natural.
The best way to do this is to find areas of common interest. We have shared goals and objectives for the negotiations. We need to compare our approaches to everything. We also need to engage in dialogue with the United States. This is, after all, a trilateral relationship.
Sometimes we agree with the United States on certain issues. We have issues with Mexico, and Mexico and the United States share the same point of view on certain issues with Canada. This is, after all, a trilateral relationship with different facets. In my opinion, the relationship works best when we’re very open with each other.
[English]
Senator Coyle: I do not know if this is a fair question, but I wish to ask about Canada’s trade relationship with China and how closely we have to be careful in terms of aligning it with how the U.S.’s trade relationship with China goes. We have followed suit on the issue of EV tariffs, et cetera. Could you speak to that area?
Ms. Hillman: Sure. It is an important question.
China is an important export market for Canada. Coming from the West, from a farming community, I can attest to that. It is also an important country in the world with a lot of stature and influence.
China is also a country that has adopted certain kinds of economic policies that have created hardship and challenges for some Canadian industries — “trade irritants” is the term of art — and has made it difficult for our companies to compete internationally.
From my perspective, it is perfectly possible to look at those irritants that have been brought to our attention that are out there and find ways to address them as Canada but also address them with our partners, to the extent that we have common perspectives, and also ensure we are developing a constructive and effective relationship with China where it is in the best interests of Canada.
It is in the best interests of Canada in certain respects. We can definitely do both. We need to do so deliberately and carefully. That is the path we are on.
Senator Al Zaibak: Mr. Moen, I believe that the signing and conclusion of NAFTA more than 30 years ago represented a great, historic breakthrough which resulted in a win-win situation for both countries.
The problem now with the renewal of NAFTA and its iterations through CUSMA is the limited time it requires for review, and changes of the political environment sometimes dictate some reluctance to obey or to comply with it.
Has your department given any thought or consideration for a more all-encompassing framework that can outlast and be more comprehensive than the current CUSMA and can outlast the periods of renewal and can appeal to the governments of both countries, receiving the endorsement of both administrations, as well as more perpetuity, let me say, that does not lend itself to changes or instability in the political leadership of any country?
Mr. Moen: First of all, it is a very good question. You get to the point of stability, and that is what we hear from stakeholders in Canada. They want stability to be able to make investment plans and decisions. That is certainly a key goal for us as we go forward.
The scope of CUSMA is quite broad. It covers a wide spectrum of economic activity — a much wider spectrum of economic activity than NAFTA before it, which in turn was an expansion of our Canada-U.S. Free Trade Agreement. That is an evolution we could see continuing. As we engage in this review, we could cover more economically relevant issues. That is an interest we are hearing from some stakeholders in doing and something we are open to examining.
In terms of going beyond the economic issues, that is a different kind of question. Our relationship with the United States is multi-faceted. We have all kinds of areas where we cooperate and work together. As we negotiate trade agreements, we tend to be focused on trying to recognize that cooperation but not tie that right into the agreement itself, but rather keep those as separate issues and focus on the trade and investment issues.
Senator MacDonald: Ambassador, in March, I was in Washington for a fairly lengthy meeting with the Canadian American Business Council. There is a lot of concern around that table; many of the interests are the same.
When it comes to the American business community, like the business council and many other interests, what are you hearing from their participation down there? What sort of influence, if any, are they putting on the negotiations?
They were very concerned about the importance of the supply chains. They wanted to ensure they were not disrupted. It is a large community down there, with a big business interest. We do not get a lot of feedback on this side of the border about what they are saying or doing behind the scenes. I wonder if you could bring some light to that.
Ms. Hillman: Senator, there is no question that they are raising their voices. What is different from what people might have seen in the past is this is not a public thing that is happening. I can assure you — and I know from talking to CEOs down here, members of the White House and even the President himself — that these business leaders go and see the President. They talk to him about his policies. They talk about what they like. They talk about what they don’t like. Maybe “like” and “don’t like” aren’t the right terms. They talk about what they think is working. They raise facts and observations around some of the effects of things that may be more challenging for them. I believe they get a hearing.
As I said, the President is very interested in facts and hearing from people he respects. He certainly does respect business leaders in the country. I am confident he is hearing from them.
I started by saying he takes his own counsel. It does not necessarily mean that he will always follow their advice or input, but the U.S. administration is getting that input.
The Chair: Ambassador, thank you for your responses. We have gone over time. We are interested in the subject, as you would expect.
On behalf of the committee, thank you for being with us today, for your candid answers and for the great job that you and your team are doing. The same goes for Martin Moen and his team here in Ottawa. I know you are working seamlessly together.
This is an important issue for our country, and I dare say that we will be returning to it from time to time. With that, we will probably invite you to meet with us again, ambassador.
For our second panel, from the Aluminium Association of Canada, we welcome Jean Simard, President and Chief Executive Officer; and from the Canadian Steel Producers Association, we welcome Catherine Cobden, President and Chief Executive Officer.
Welcome to both of you. Thank you for being with us today. We are ready to hear your opening remarks. You witnessed the last panel. Senators will ask questions and we will expect answers from you.
Mr. Simard, please go ahead.
Jean Simard, President and Chief Executive Officer, Aluminium Association of Canada: Good afternoon. Thank you for inviting us to take part in this hearing. I speak on behalf of the Aluminium Association of Canada, which represents three world-class primary producers: Alcoa, Rio Tinto and Aluminerie Alouette with nine smelters — eight in Quebec and one in B.C.
The CUSMA agreement has delivered measurable results for the North American economy. For Canada, CUSMA has ensured predictable and secure access to its two largest export markets, providing the confidence required for long-term investment and for maintaining deeply interconnected industrial value chains.
For the aluminum sector, CUSMA has provided a strong foundation for trade. The agreement has reinforced the integrated nature of the North American aluminum market, in which Canadian producers supply more than 50% of U.S. demand for primary metal while producing 80%-plus of all the primary metal in North America.
This open and predictable trade environment has enabled the region to secure a stable supply of a material essential to the transportation, construction, energy and defence industries, as well as reinvesting on a yearly basis in Canada an average of $1 billion into our asset base and, therefore, competitiveness.
For every job in Canada’s primary aluminum sector, approximately 13 well-paid jobs are supported in the United States. With a goal to reinforce and modernize key provisions of CUSMA in order to enhance competitiveness and secure the integrity of North American markets, our association recommends the following:
The review should focus on practical improvements that modernize implementation while maintaining the trust and stability that CUSMA has built among North American partners.
When significant adjustments are required, as in the case of aluminum, targeted side agreements or annexes to the main text should be the preferred approach.
Closing loopholes that allow circumvention of trade rules is essential. The review should place greater emphasis on improving transparency and enforcement, particularly in sectors identified as critical to economic and national security.
The CUSMA trading space provides major benefits to all member countries, but tariff-free access can also create arbitrage opportunities that some actors may seek to exploit. The import of falsely declared aluminum wheels is a clear example of this type of behaviour, which undermines fair competition and weakens confidence in the integrity of the agreement’s preferential regime.
If any partner fails to fully meet its responsibility to secure its borders and enforce trade rules, the credibility and stability of the entire CUSMA trading space could be compromised.
Canada should advocate for the progressive elimination of tariff and non-tariff barriers that run counter to CUSMA’s spirit and objectives.
North America’s demand for aluminum is projected to rise by as much as 80% by 2050. This growth will generate new opportunities.
Meeting future demand with a secure metal supply will require substantial new private investment and a fair and transparent regional market, supported by consistent trade rules and predictable policies throughout North America.
Firms operating across market-based economies cannot compete on equal terms with producers from non-market economies that benefit from state intervention and structural distortions.
Addressing the non-market practices that underpin China’s market dominance is, therefore, essential to the development of a secure and competitive regional aluminum framework.
A full tariff alignment across the entire CUSMA trading space would not be appropriate, as it could limit Canada’s sovereignty on trade policy. However, a more targeted approach should be considered for key economic sectors, as has already been done for steel and aluminum originating from China.
Tariff harmonization for aluminum and other strategic materials is essential to maintaining a level playing field within North America.
Canada, the United States and Mexico should ensure consistent treatment of these products across their respective tariff schedules.
The rules of origin could be one of the most effective tools for preserving the integrity of North American value chains. Updating and clarifying these provisions for aluminum products would ensure that only genuinely North American materials benefit from CUSMA preferences. This should include extending specific origin requirements to intermediate and semi-fabricated products such as wheels, extrusions and other forms frequently used to circumvent trade rules.
Transparency and traceability are essential to ensuring the credibility of CUSMA’s preferential regime.
Canada’s aluminum import monitoring system, together with emerging U.S. and Mexican mechanisms, should be aligned to form a unified continental framework for trade data collection and analysis.
Harmonized smelt and cast reporting across the three countries would allow for accurate tracking of product origin, facilitate enforcement and provide governments with real-time data to identify irregular trade flows.
A coordinated and interoperable monitoring system would prevent circumvention and give policy-makers a clearer view of supply chain dynamics.
Such integration would also support trilateral cooperation in responding swiftly to market distortions and in protecting the long-term integrity of North American aluminum production.
By recognizing broader economic trends while leveraging Canada’s existing industrial strengths, we can maintain our competitiveness and drive economic growth.
A stronger alignment on tariff treatment, origin rules and traceability will reduce exposure to external distortions and ensure that aluminum continues to serve as a foundation for shared economic growth.
Thank you.
The Chair: Thank you, Mr. Simard.
We will hear next from Catherine Cobden.
Catherine Cobden, President and Chief Executive Officer, Canadian Steel Producers Association: Thank you all for having me. I appreciate the opportunity to address you.
As mentioned, my name is Catherine Cobden with the Canadian Steel Producers Association. We represent 100% of Canada’s steel production, which runs from Alberta to Quebec. We represent some of the largest steel consumers in the country. Thank you for the invitation to provide testimony and to share the views of these members on Canada’s trade relationship with the United States and the approaches we are seeking, both within and outside of CUSMA, to support our industry, our workers and our communities at what I must confess to be a very challenging time.
For over seven months, the Canadian steel industry has been living under section 232 tariffs from the United States. The impacts on our industry continue to build as these tariffs destroy our access to the U.S. market, which was a destination for approximately 6 million tonnes — which was half of the entire production in our country — in 2024.
In 2025, we have seen our shipments drop precipitously. We are now 50% of what we shipped. We anticipate it will be even lower levels by the end of this year. Furthermore, the United States has also expanded its section 232 tariff regime to cover $20 billion of Canadian exports of manufacturing goods that contain steel and aluminum. This is a direct assault on our Canadian customer base. This is only the beginning as the U.S. continues to expand its list of targeted derivatives, such as the wheels that Mr. Simard was mentioning, with hundreds of products expected to be added to this list by the end of this year and so on and so forth — every three or four months, we anticipate.
It is a very, very complex time to be talking about alignment and building on the remarkable integration that Canada has enjoyed with the United States for over 30 years. Regardless, as we approach bilateral and trilateral discussions, it is imperative to remember that the Canadian steel market is actually impacted by the very same global phenomena that are driving U.S. steel trade policy and the tariffs themselves. Global excess capacity — and in steel that is predominantly from China — destroys markets, creating a dumped, below-market pricing regime that is directly impacting our viability and our competitiveness.
While this scenario has been building significantly, particularly over the last decade, the U.S. global trade action targeting that phenomena — but also including tariffs on Canada and Mexico — is greatly increasing the urgency for our own country to take action. The action we are looking for is to support two key objectives. Number one is protecting the domestic industry to recapture the Canadian market share, and number two is demonstrating our strong commitment to addressing this common global challenge to our largest trading partner, the United States.
Despite the trade war that is raging on between our countries, the Canadian Steel Producers Association members aim for a CUSMA review that fosters even closer collaboration with our U.S. and Mexican industries and their governments to align efforts to safeguard the North American market on this very important challenge.
For far too long, our respective markets have suffered from the impacts of unfair trade practices, dumping, transshipment, circumvention and evasion that results from this global overcapacity and leads to the erosion not just of the Canadian steel industry but also the North American steel industry.
While the Canadian steel industry greatly appreciates the steps that have been undertaken since the tariffs went in place in March — we’ve had three very significant announcements by the Canadian government — we continue to need to do more, and rather urgently, to strengthen our measures to protect the industry from this unfair trade and to support the North American perimeter to trade.
Specifically, we are looking to ensure that derivatives are included in all trade measures, that further import restrictions into Canada are placed on Chinese melted and poured steel and that Canada limits its remission framework only to products that we do not produce in our country. To measure our progress, we seek the adoption of a domestic steel market share target of 80% to 85% in line with comparable domestic steel market shares of the U.S. and the EU. Both of these trading partners have acted differently, but they have achieved the objective of 80% to 85% of their market being supplied by their own domestic industry.
We see other opportunities to strengthen steel trade across the North American regions. It is also our hope that a renewed CUSMA would see an expansion of the existing rules of origin provisions to a range of derivative products as well as a broader list of automotive parts and products and at a higher percentage. We also seek strengthened trade remedy tools, such as improved anti-circumvention legislation, and further enhanced cooperation between customs authorities and information sharing across all three countries.
Senators, before the trade war, the North American steel industry benefited greatly from our combined efforts under CUSMA to protect the North American region. Today’s trade war context really strengthens our urgency to do more, faster. The changes we’re recommending will strengthen our ability to recapture our own market in a very timely manner — time is absolutely of the essence — and help us endure. Also, we think that these concrete steps will demonstrate unequivocally to the United States that we are stronger together than apart and, ideally, see a conclusion to this trade war. Thank you.
The Chair: Thank you, Ms. Cobden, for your remarks.
Senator Ataullahjan: Thank you to both of you for appearing before us.
My question to you is: What is the best outcome you could possibly hope for when looking at the ongoing crisis and how everything has stalled? Is there any international market that you would look at? I mean, I hear you that it’s a complex time. There’s dumping and the Chinese steel. My question is to both of you: Is there any international market that you’re hopeful you could work with?
Ms. Cobden: Our situations, as you’ll see, are quite different. The best outcome we’re hoping for is we take the perimeter that the U.S. has done around its country and expand it trilaterally across the three regions. It’s not necessarily the same tool kit, but the same outcome. And intraregionally, we can get back to the free trade environment that has been really crucial to the economy, I would argue, of all three nations.
As far as market diversification goes, this is where Mr. Simard and I will have very different answers for you, I think, but I’ll let him speak for himself. For us, we really have our own market, or our U.S. market. Less than 0.1% of the steel we produce goes to the EU, for example. The reason for that is quite easy to understand. When you have such a significant glut of steel coming out of one region that’s going all over the world, it’s very difficult to penetrate new markets. We appreciate market diversification as an important strategy for our country and we support it, but unfortunately given the circumstances that we face in steel, it really doesn’t apply.
Mr. Simard: In our case, first it’s containment through fencing out the CUSMA trading space between the three countries against non-market-based economy metal. Second, we’re in a different ball game because there is no surplus of aluminum on the planet: 73 million tonnes produced and 73 million tonnes consumed. The problem is Chinese overcapacity that uses outside markets as a valve to push the surplus metal into the markets.
We ship to Europe. We can ship to the Pacific area. We’re shipping to the U.S. Both the European and American markets are in dire need of metal. The U.S. consumes 5 million tonnes of primary metal. They produce 670,000, which is the equivalent of one smelter on Quebec’s North Shore in a year. So it’s very important to fence out the territory because it’s a privileged trading space. We should not let non-market-based economy metals seep in through any of the borders, and that’s fundamental to us.
Senator Ravalia: Thank you to you both for being here and for the work that you’re doing.
Much has been made about nation-building projects. Have you had any direct discussions with the Prime Minister’s Office with respect to how your industries could be integrated in some way to ensure that your overcapacity or the potential loss of markets could be utilized within the nation to enhance some of these projects?
Mr. Simard: In our case, it’s different. We are producing an industrial input, not a final product. We have markets in Europe and the U.S. In terms of nation building, the interest is more for the processors and the small- and medium-sized businesses scattered around the country that transform aluminum into semi‑finished and finished products. Aluminum is not a material for infrastructure purposes. It’s more for buildings, for houses and for cars.
The project that we have earmarked — and we’ve had meetings and the government has shown a lot of opening — is for the Build Canada Homes undertaking. It’s a fabulous concept that was developed and designed in Quebec. It’s wood and aluminum prefabricated houses. It’s a very nice design, very competitive price-wise and could be deployed all across Canada, enabling value chains to be developed on a regional basis to support the delivery of this concept.
We are actively working with the federal government. They are ensuring that the call for tenders or call for interest will include this type of project solution.
Ms. Cobden: From the steel perspective, we were encouraged to hear the Prime Minister say that the very foundation of the national projects that are being announced will be the Buy Canadian policy. We haven’t seen the Buy Canadian policy released yet. We have been consulted on some aspects of it. It shows mandatory use of domestic steel at reasonable levels, so let’s hope it passes or it gets released as written.
The big opportunity would be if the provinces and the municipalities would adopt the same Buy Canadian policy. That would really help, but in all cases, none of it helps quick enough for the current context. That’s why we’re prioritizing the trade measures at the border, and the next piece for us is, of course, the Buy Canadian policy. It takes a long time for projects to happen. We are in an existential crisis right now, but we really look forward to playing a role in those national projects.
The Chair: Thank you very much.
Senator MacDonald: I can stand here for hours and talk about steel and aluminum because we have heard about it so much from the Americans in the past 15 years. It’s quite a topic, actually, on its own. There will always be complaints from the Americans that we’re letting too much Chinese steel and aluminum come through this country, which is being reprocessed and sold to the U.S. I’m curious: How much of that steel and aluminum that comes in is brought in by those who produce steel and aluminum in Canada? How much is brought in by third parties that are processing and exporting? Do some of our producers actually need the steel and aluminum themselves?
Ms. Cobden: Not in our case.
Mr. Simard: Not in our case either. The aluminum coming in from other countries — since we’re not an end market, and we don’t have the critical mass that the U.S. has — is metal that is needed because the supply is not available from the U.S. We’ve been in a contentious situation with our U.S. industry counterparts about this. When the market gets tight in the U.S., the sheet and plate stay in the U.S. As we’ve told them, we’re not lemonade stands that can wait for two years for the metal to become available again, so we have to import from China. It’s the only place that will supply this. Until they have the capacity to supply the whole North American market, we need access to other sources of supply. It’s not the primary. We produce the primary. We don’t import any primary from any other country.
Senator MacDonald: I know both industries have concerns, but which one is more vulnerable right now: the aluminum industry or the steel industry? It’s the steel industry, correct?
Ms. Cobden: Yes.
Senator MacDonald: I assumed that.
Ms. Cobden: The only thing I would add to the conversation and your question about the steel coming into Canada is our experience is often the issue is it comes in at a dumped price. There is significant devaluation of steel in our country as a result of dumping, which goes back to unfair trade practices. We have some challenges in our country to overcome on unfair trade.
Senator MacDonald: Our steel goes both ways, doesn’t it?
Ms. Cobden: Between?
Senator MacDonald: Canada and the U.S.
Ms. Cobden: Yes, correct. Actually, that’s a very good point. We send 6 million tonnes to the United States. They send about 3.5 million tonnes to us. We are each other’s largest trading partner in steel. We mention this to them regularly.
Senator Al Zaibak: My question follows the thread of Senator Ravalia and Senator MacDonald’s questions.
Given the current trade war uncertainty and the continued threat we are facing, can you imagine any new use domestically that can result in absorbing a significant percentage of the output that is affected by such trade war? I got the answer from Mr. Simard about the nature of the aluminum industry, but I’m thinking more in respect of stockpiling for railways and bridges, using any item or affected capacity, let me say. And if there is such kind of a use, what percentage do you think could be absorbed in stockpiling starting now, not in the future?
Ms. Cobden: The challenge we have is scale. We produce a lot of steel, but the good news of that is just at the highest level, we produce about 12 million and our country uses about 13 million to 14 million. To your question, it looks like that should be a fit.
Unfortunately, for example, regarding rail, because we’ve had such an integrated economy, we stopped producing rail because the U.S. produces it and is our supplier. That is part of the pivot that the domestic industry needs to make: to pick up these products that we haven’t made for a long time. We used to make it actually.
Even for the high-speed rail, we’re very excited about this project. We hope to be able to supply it if we can pivot to make it. I don’t remember the exact number, but it was more like months of production rather than years of production. The scales are off by these individual projects.
That’s where the Buy Canadian policy which is prioritizing domestic steel in projects is so crucial, but it needs to go further and faster, yes.
Mr. Simard: It’s all about numbers. It’s all about critical mass always. You always get back to that.
A 1,000-kilometre railway is six months’ worth of production of whatever you’re thinking about. What do you do for an encore after that? You won’t export prefabricated parts to Europe or Asia because you have to face China, South Korea and Europe, so that doesn’t do the trick.
The importance is to create the critical mass relatively across all the public markets — municipal, provincial and federal. You go from a $35-billion federal government procurement number to a $150-billion-a-year procurement number. Then you can send a signal to the market that there are 35 bridges projected over the next 10 years. Industry will invest and jobs will be created, but if it’s on a piece-by-piece basis, forget about it. The market will not respond. It’s very important.
[Translation]
Senator Hébert: Mr. Simard, it’s good to see you again today under different circumstances than in the past, in our case.
I would appreciate your thoughts. I heard you in a radio interview talking about the agreement that Canada was trying to reach in the aluminum sector. You said that other opportunities are available and that steps can be taken to support the industry. I would like to hear your perspective on the relative significance of this much-discussed sectoral agreement, assuming that it can be reached, compared to other opportunities in the markets and the efforts that the government should make to support the industry.
Mr. Simard: Thank you for the question. We export 2.7 million tonnes to the United States each year, out of a total production of 3.3 million tonnes. That’s about 90% of our production. This amounts to 52,000 tonnes of aluminum per week. With a 50% tariff, this adds up to $75 million in tariffs per week for three manufacturers.
Obviously, 50% tariffs aren’t sustainable for our relationship with the American market. At some point, Ford, GM or another player will start thinking about substituting metal in order to move back to steel or other types of components. This is called market destruction, demand destruction.
The situation is critical right now, with all the negative external pressure on the automotive sector from the political arena. People talk about the need to diversify. We’ve already diversified and we’ve been exporting to Europe and Asia for years. Our players — Alcoa, Alouette and Rio Tinto — already manufacture products in Europe, in Norway or Iceland, to supply the European market. They already have a connection to the market and they’re already structured.
Why don’t we do more? We follow the money. The most lucrative market is the American market, and our main concern is profit margins. This is known as the netback. It’s the difference between the cost at the factory gate and the market price once the metal has left the factory. For decades, the American market has been by far the most profitable.
We aren’t prepared to abandon this market as a result of the current situation. We’ll do everything in our power to maintain our considerable market share before we surrender it to competitors from the Middle East, Russia, China or India.
Senator Gerba: I would like to thank our two witnesses for joining us today. My question is for both of you. The United States Supreme Court must soon rule on the legality of the tariffs imposed by the American executive branch. Does this ruling seem promising for your respective sectors, or do you believe that it will have little impact on the current dynamic of your exports?
Mr. Simard: Our exports are covered by section 232 of the tariff tool, which isn’t before the Supreme Court. The International Emergency Economic Powers Act is before the courts.
However, there could be an impact. It could discredit and weaken the position of the American government, of Mr. Trump, regarding the tariff tool as a way to negotiate with countries.
After a ruling that runs counter to the White House’s position, agreements reached under tariff pressure become increasingly fragile. This gives Canada potentially stronger bargaining power later on, given the weakened American negotiating position. However, there isn’t any direct impact on our tariffs.
Ms. Cobden: Thank you for your question.
[English]
I agree with Mr. Simard. The situation is the same for the steel sector. I will add an additional point which is that the section 232 legal basis is stronger than the IEEPA basis. That’s why there has been no challenge, because there is more structure.
Mr. Simard and I found our two industries back in the tariff world quickly upon this new administration because the legal construct, if you will, had been done back in 2017 when we had the previous tariff regime. It was like a switch; they flipped it on.
This also explains why the other tariffs, like the forestry and other lumber tariffs, have taken longer, because they’ve actually gone through a process. For IEEPA, there is no such process.
Senator Wilson: Thank you both for your testimony. It has deepened my understanding of the impact on both of your sectors.
I’m interested in understanding the magnitude. Obviously, getting to a new normal with the United States is a priority. I’m interested in understanding the extent of foreign steel content in Canadian projects, Ms. Cobden. How big of a problem do we have there in terms of provincially and municipally, I am thinking?
Ms. Cobden: If I may answer that question broader than projects, in our country we have seen offshore imports into Canada grow systematically year over year over the last decade to the point where the number is something like 8 million tonnes where we’ve only supplied about 4 million tonnes. It’s a significant challenge. The 8 million includes some U.S. stuff. Let’s say it’s 5.5 million from offshore and a few million from the U.S. and the rest from us. We are small. That’s why I was mentioning we’d like to see an 80% to 85% target, like the EU and the U.S., because we’re much lower than that as I sit here today.
Senator Wilson: The other thing I’ve been learning about is this: Today, I toured the construction on Parliament Hill and learned some of the steel inputs into the project are, unfortunately, not from Canada because we don’t manufacture that particular type. It sounds like there is retooling happening to be able to make different things. How quickly do you think we can get that up and running?
Ms. Cobden: The first good news to tell you is that we have looked at all the data. In 2024, if we looked at everything we brought into our country, we have the capability to make 80% of it, or over 80%. The number is 82% of all imports we actually could make.
There is, though, less than 20% that we can’t, and some of that is in that project. That would require retooling or substitution. An interesting part of our conversations with project managers is that there are different solutions that we might be able to offer that are more in the manufactured space.
If we have to pivot, though, there’s no clear answer because for some of our industry, it’s a small investment to get there; for others, it will be a significant investment to get there, so that’s all going to take some time.
Senator Pupatello: Welcome. Have you calculated how much of our exports would be replaced by local production if the government were inclined to do that at every level of government?
My understanding is it’s hard to collect the data to see that you could replace a large percentage of it.
Second, have you promoted a list of the kinds of non-tariff barrier opportunities for us to prevent some of that so-called steel dumping, like other jurisdictions do with our goods — maybe it’s not in the steel sector, but in other sectors, there’s something like a coal surcharge for steel that comes from coal-fired energy production jurisdictions?
Ms. Cobden: Right. On the exports replaced by domestic production, we believe we can achieve an 80% to 85% consumption rate in our country. Currently, as I mentioned, we’re below 50%. We’re at 40%, or whatever the number is. We do believe there is a significant Canadian substitution potential.
I was just mentioning we make a lot of what we import. That’s a tremendous opportunity for the Canadian steel sector at a time when we desperately need market. That’s point number one.
As far as non-tariff barriers go, there are many of them. What we’ve been focusing on are proposals to help generate the market conditions we’re looking for. I mentioned some of them in my remarks, but there are others as well.
The point I wanted to make earlier was on the private sector use of domestic steel as well, we could consider incentivizing our private sectors. If they use domestic steel or domestic materials or domestic lumber, they will get an advantageous tax break or something. I do not know what the exact correct formula would be, but there are further opportunities to drive that forward.
The Chair: I will use my privilege as chair to ask a question. Ms. Cobden, you mentioned what happened in 2018, with the switch being turned off and then turned back on. In 2018, we had the G7 presidency. All countries were working hard to come up with a mechanism to deal with the dumping issue from China.
At the same time, in terms of dumping, particularly for steel, the Organisation for Economic Co-operation and Development had set up a mechanism. It was felt we should go beyond that. We had consensus. Then we didn’t because the Trump administration decided to go a different way and put the tariff not just on Canada. I received a phone call saying, “Don’t feel so bad; it’s not just you. We are doing it to Japan and to the European partners too.”
From that experience, what did both of you learn in terms of being prepared for this particular moment? How does this moment differ from the last one?
Ms. Cobden: We both happened to be here for the first trade war, so we can both speak to this. Would you like to start?
Mr. Simard: Yes. When we found ourselves in that situation — and it was the first time ever that the aluminum industry was subjected to this — it came out of nowhere. We kept on saying it’s steel and not aluminum. It’s because of steel that we are in this cookie-cutter approach and we don’t fit in this picture. Finally, we had to play the whole picture. Through that, we developed a close relationship with our U.S. counterparts: the U.S. industry.
We initiated — I did — what we call a quad, which is a weekly meeting of our Japanese, European and U.S. counterparts to mirror the G7 group of countries and to educate ourselves regarding shared trade issues stemming out of that situation.
We developed a G7 aluminum organization that is still working together today to get G7 countries to address those issues related to Chinese overcapacity and the use by non‑market-based economies of the G7 countries’ markets to push their surpluses.
Today, we have moved further ahead. In Canada and in the U.S., we have developed aluminum import monitoring systems with the federal government. In those days, you will remember the joint statement of 2019 put as a condition for tariff exemption the setting up of an aluminum import monitoring system on both Canada and Mexico. Canada moved right away. Within six months, it put in place its aluminum import monitoring system.
Mexico to this day has not delivered. They are being pushed by the U.S. We are funding an effort to get Mexico to put its system in place. They are saying they will deliver by mid‑November of this year under U.S. pressure. We will believe it when we see it.
The industry is aligned on harmonization of tariff codes as well as HTS codes and having interoperable aluminum import monitoring systems. The problem is that countries are not working together to bring this to pass, even though industry is ready to move and knows what to do and how to do it. We developed the road map. We handed it to governments, and we have to keep knocking on doors for things to happen.
Ms. Cobden: It is very different in steel. I appreciate that history. We have had the North American Steel Trade Committee. It was the governments and the industry across North America. There is a strong alignment agenda, but for one issue: The U.S. industry thinks they should tariff the Canadian and Mexican steel industries. If you set tariffs aside, there is all sorts of alignment.
There continues to be a view that Canada and Mexico are back doors. I have learned a lot of lessons along the way. I do not have time to share them. One point I wanted to make is: You asked what is different this time. There are more significant impacts and urgency, given not just the 50% level but also this inclusion of steel-containing goods and going after our customers. We never imagined anything like that, and it is getting worse on a regular basis.
The Chair: Thank you for that.
[Translation]
Senator Hébert: You’re both in contact with your members in your respective industries. You also engage in discussions with Canadian and American officials.
On a scale of 0 to 10, based on the feedback received, how confident do you feel that an agreement will be reached with the Americans in your respective sectors in the near future? That’s the burning question.
[English]
Ms. Cobden: In the near future?
Senator Hébert: In the near future.
[Translation]
Mr. Simard: On our end, we don’t expect a quick agreement. Our position, because I think that it should be known, is as follows. In English, we say this:
[English]
Pain is on their side. Time is on our side.
[Translation]
We’re telling the Canadian government to take its time, because the American economy must feel the full impact of the tariffs. This impact is beginning to show, given the manufacturing cycles that now require metal subject to 50% tariffs. This will put pressure on the American administration over the coming weeks and months and put Canada in a better position to negotiate. This is the case for our sector. However, I’m not saying that the same is true for steel.
[English]
Ms. Cobden: For steel, we agree that it will take time. The problem is — unlike the aluminum association and aluminum sector — in the steel sector we have less time. I mentioned in my opening remarks, we are expecting a complete closure of market. We’re still shipping into the U.S. because there are still contractual things, but that is all coming to an end. Early next year, you will see very little steel going to the United States. This is an existential crisis. We do not have time, which is why our strategy has been to pivot to what we can control and do in Canada. I have already laid out what I think are the best scenarios.
I do not wish for that to mean or be interpreted that we do not think that we will ultimately get there. The question is we do not have time to wait for the pain points to take place in the United States, which they will. They absolutely will, but we do not have that time.
[Translation]
Senator Gerba: The Prime Minister said that Canada would double its exports outside the United States. I understand that this isn’t a priority for your sector, Ms. Cobden, in terms of steel.
Mr. Simard, has the Prime Minister contacted you, or has he consulted your members to gauge their interest and to determine how the government can support your efforts to double your exports? We need to start thinking about this, even though we understand the urgent need to maintain the current system. We always say —
Mr. Simard: A bird in the hand is worth two in the bush.
Senator Gerba: Exactly! So, what’s your strategy? Did they consult you?
Mr. Simard: We’re in constant contact with the federal government, including ministers’ offices and the Prime Minister’s Office. They know and understand our industry and its dynamics intimately. The situation is quite clear. We’re operating at 95% capacity. We wouldn’t be able to increase our production. Our metal is in demand in all markets.
We don’t need to make any extra effort to capture another market. We already have a strong presence in the United States. This summer, we redirected 45% of our export volumes headed for the United States to Europe. That’s huge. We pulled this off in just a few weeks, with a considerable logistical effort. This created a metal shortage in the American market and forced the Americans to work through their accumulated inventory of pre‑tariff metal. As a result, sooner than expected, they’re now starting to have access to metal that costs 50% more. This is hurting them more and more. I don’t think that this statement applies to aluminum. We can’t double our output. We’re already operating at full capacity and we’re dominating the markets.
Senator Gerba: I do understand that this isn’t necessary, but it’s hypothetical. Let’s imagine that the United States says that it will continue, and tomorrow, you have to return to your —
Mr. Simard: We can do it. Market dynamics and our maritime access for almost all our factories make it possible to switch to another region quite easily.
The Chair: Thank you.
[English]
Senator Dean: It is refreshing for someone who has worked in government for a long time to hear witnesses come to a Senate committee and speak positively about the Canadian government, frankly. Tell us which departments you work with in particular, and spend more time telling us how they add value. I have a sense they know a lot about your industries, and they are there to support you as opposed to get in the way or make life more difficult for you. We need to hear more about that.
Ms. Cobden: I can start. The three announcements I was referring to in my remarks rely on, for example, the establishment of a tariff-rate quota system at our borders and some additional border measures.
That is all done out of the authorities of the Minister of Finance. There is a significant amount of authority on trade matters that resides in the Department of Finance.
We also, of course, work with Innovation, Science and Economic Development Canada as well as Global Affairs Canada — certainly every aspect of global affairs, both the foreign affairs side and the trade side — and the Privy Council Office, the Prime Minister’s Office and certainly the ambassadorship as well, as we have discussed, out of Global Affairs Canada. Those are some examples of the departments.
As a result of the pointy end of where steel is right now, more and more we’re discussing with Public Services and Procurement Canada and Housing, Infrastructure and Communities Canada.
Mr. Simard: It’s the same roster here. I would add a few things, though. I have never seen government so hands-on, moving fast and doing everything to be as agile as possible and as responsive as possible in a timely fashion.
I’m not saying it works all the time. The biggest complaint we’ve always had about the federal government is the capacity to deliver. Execution has always been the problem. It takes a lot of time to get things done.
This is changing. It needs to be changed, because we are in a crisis situation. When we turned around as an industry and asked the Finance Department to set up a government aluminum task force like we had in 2018, it was set up in a matter of three days.
We meet every second week. We have other individual meetings with other departments. Everybody is there. They not only return the calls — they also make themselves available.
I will finish by saying that based on what we went through last time, we initiated in January of this year the creation of the Canada US Trade Council, which we co-chair, which meets on a weekly basis with 60 industrial association members and the largest unions in Canada to talk and focus strictly on these issues for an hour and a half with government representatives such as the ambassador or the deputy ministers from the Finance Department to debrief.
The Chair: Thank you, Mr. Simard.
On behalf of the committee, I wish to thank Jean Simard, President and Chief Executive Officer, Aluminium Association of Canada; and Catherine Cobden, President and Chief Executive Officer, Canadian Steel Producers Association. Thank you for enriching us with your knowledge today and for underscoring what a critical moment we are at in our country.
I dare say continue your good work. We may wish to ask you back again as we move further along the road.
With that, colleagues, we will reconvene tomorrow morning in this room at 10:30 a.m. to conclude our Africa study.
(The committee adjourned.)