US businesses claim Canada is a back door for China’s products
As U.S. President Donald Trump sticks to his campaign for tariffs on imports from Canada, some U.S. industries are accusing Canadian competitors of using cheaper materials from China that violate free trade rules and hurt American companies.
The allegations came to light during a recent public hearing in Washington on the future of the Canada-US-Mexico Agreement (CUSMA). During the hearing, leaders from various business sectors urged the Trump administration renew business deal When it comes up for review in July.
However, a number of industries – from steel producers to truck-parts suppliers to kitchen-cabinet manufacturers – expressed concern that some Canadian and Mexican companies were taking advantage of CUSMA’s preferential trade conditions by sending products containing significant amounts of Chinese-made content into the U.S. market through the backdoor.
Luke Meissner, a lawyer for the American Kitchen Cabinet Alliance, said at the hearing that Canada and Mexico have become conduits for products from China, bypassing hefty retaliatory duties imposed by the U.S. on Chinese-made cabinets and materials in 2020.
“China did not leave the US market, it just changed the return address,” Meissner said. “We closed the front door to China. Canada and Mexico became side doors.”
On Thursday, business leaders in Washington defended the Canada-U.S.-Mexico Agreement on Trade (CUSMA) during the second day of high-level hearings. Testifying from all three countries said a US withdrawal from CUSMA, as US President Donald Trump has threatened, would be devastating to North American economies.
Over the past five years, Meissner said, Canada has “dramatically increased” imports of cabinets and cabinet materials made in China — such as plywood, medium-density fiberboard (MDF) and moldings — while at the same time boosting exports of finished cabinets to the U.S.
“The USMCA should reward real manufacturing, not low-cost assembly of foreign parts,” he said, using the American acronym for the trade agreement.
Trump administration slapped 25 percent tariff On imports of cabinets and vanities from Canada and several other trading partners in October, the duty will increase to 50 percent on Jan. 1.
Ostensibly the purpose of the tariffs was to slow the flow of Chinese-made cabinets into the US from third countries, but it is Attack on products actually made in Canada Too.
The Canadian Kitchen Cabinet Association defends its products as Canadian made, and says US tariffs will result in even more foreign products being dumped into Canada.
“Our industry also needs protection from cheap foreign imports coming into our country,” the association told CBC News in a statement.
Concern over Canada’s steel imports from China
American companies that produce steel or use it in manufacturing also accused Canadian companies of undercutting American businesses by using cheap inputs from China.
Robert Wahlin, president and CEO of Stoughton Trailers, a Wisconsin manufacturer of transportation equipment such as freight trailers, says his main concern is the products of a competitor that is wholly owned by China International Marine Containers Ltd. (CIMC).
“In many cases, products will be manufactured and transported from China to Canada, and they will go through some finished assembly and then they will be transported to the U.S.,” Wahlin told CBC News in Washington.
“But all of that product originates in China. So they’ve primarily got Chinese labor, Chinese steel, Chinese aluminum,” he said.
Wahlin said at the hearing that the current terms of CUSMA “allow third countries to exploit loopholes in the agreement to target the U.S. market.”
Canada is ‘militant’ about stopping trans-shipments
Eric Miller, an expert on Canada-US trade policy, argues that Canada is not as much of a backdoor to Chinese steel as US companies perceive it to be.
“Canada is quite hawkish about the prevention of Chinese trans-shipments, because it knows its own access to the U.S. market is at risk,” Miller, president of D.C.-based Rideau Potomac Strategy Group, said in an interview with CBC News.
Miller says Mark Carney’s government has been particularly tough on keeping steel from China out of the Canadian market.
“Any objective look at Canada’s track record will show that repeatedly over the past decade, Canada has taken serious measures to attempt to control Chinese steel imports,” he said.
Many business leaders involved in the US steel industry urged the Trump administration to negotiate stricter terms in CUSMA to limit the amount of non-North American content in products to qualify for tariff-free access.
The changes they are demanding include: Canada and Mexico should impose tariffs equal to US tariffs on steel imports from outside North America, effectively creating a common arrangement for steel tariffs between CUSMA countries.
Brandon Farris, vice president of the Steel Manufacturers Association, whose members account for 70 percent of U.S. domestic steel production, says Canada and Mexico are too lax about allowing a glut of cheap steel produced in China and other non-market economies into their countries.
“We cannot allow North America to continue to be a dumping zone for excess steel capacity,” Faris told CBC News in Washington.
All Canadian steel and aluminum exports to the U.S. are currently subject to a 50 per cent tariff, which was imposed by the Trump administration last spring.
Canadian and US officials were negotiating an agreement to replace those tariffs in late October, when the President canceled the talks due to the Ontario government’s anti-tariff television advertising campaign.
The US is also imposing tariffs that include 25 per cent on some automotive imports from Canada, 10 per cent on energy and potash imports and 35 per cent on most other categories of goods.
However, products that meet the conditions of CUSMA are exempted, allowing the bulk of Canadian exports to the US with zero tariffs.
Hank Holland, chief executive of Amero Ltd., a Tennessee-based manufacturer of titanium products, says Canadian companies are importing feedstock from China – the raw material for titanium – at much lower prices than his company because Canada imposes much lower tariffs on Chinese materials than the US.
Holland said Canadian companies sell titanium products in the U.S. tariff-free under CUSMA.
“Our Canadian competitors have repeatedly presented the USMCA exemption to their customers and investors as a competitive advantage over U.S. producers like Amero,” Hollande said at the hearing.
He called for changes to the trade agreement to ensure that all three countries treat Chinese raw materials for titanium equally.
“We must maintain and protect our sovereign capabilities and close the backdoor into the U.S. market that harms American producers,” Hollande said.
Complaints from all these sectors have received the attention of Trump-appointed US Trade Representative Jameson Greer.
Greer told U.S. senators on Tuesday that one of his key ideas for a trade deal with Canada and Mexico is to tighten rules of origin.
“We need to make sure that the terms of the agreement are benefiting American producers and workers,” Greer said during testimony before the Senate Subcommittee on Appropriations.
“Rules of origin need to be addressed, because I want to ensure that the benefits of the agreement go to the agreement members and not to any third country in Asia.” Greer said.
Under federal law, Greer is required to report to Congress by January 2, 2026, his recommendations on renewing the trade agreement or renegotiating its terms. The three countries are to declare their position on the review or extension of the agreement on July 1.
“My hope is that in January, I will sit down with the Canadians and then with the Mexicans, maybe separately, just talk to them separately about what happens next,” Greer told senators.
