Tim McMenamin spent last week holding his breath: a vessel from the Philippines, carrying thousands of tonnes of steel rebar, was scheduled to land in the Port of Vancouver, and he didn’t know if he was going to owe millions of dollars in duties when it did.

Since the U.S. trade war began, the federal government has repeatedly introduced new restrictions on steel imports — adding new risks for importers such as McMenamin, who is president of Jebsen & Jessen Hamburg GmbH.

The curbs on steel imports are designed to help Canada’s steel mills sell more products inside the country, and also to offset the losses they have suffered since the

United States raised tariffs on foreign steel to 50 per cent earlier this year, which has essentially closed off their largest market.

But by Prime Minister Mark Carney’s own estimates, given at a July press conference, foreign-made steel accounts for two-thirds of all steel used in Canada — “a disproportionately high” amount compared to other countries, he said. Now, as Carney tries to shore up domestic steel mills, he runs the risk of creating price spikes and even steel shortages that could reverberate through the economy as importers pull back in the face of new policies that could saddle them with high duties.

“Our customers are calling every week asking for our offers,” said McMenamin. “And we say we can’t because the government’s contemplating new trade measures, and we don’t know the rules.”

The situation cuts to the heart of a major policy dilemma that Carney must navigate: By restricting steel imports, he risks damaging the economy in parts of Canada that have historically relied on foreign steel for use in everything from new residential towers to bridges and other infrastructure projects.

Not all steel is the same. There is rebar, the long steel rods that help prop up residential condo towers. There are also wide flange beams used in bridges and other projects. There are lampposts, and rails for trains and many other products — not all of which are produced or can be produced by Canada’s few remaining steel mills and fabricators.

Although Ottawa has taken a flexible approach, and continues to modify the steel restrictions, there is already concern that the latest wave of policies are too restrictive, particularly in Western Canada.

Ravi Kahlon, British Columbia’s minister of jobs and economic development, said his province imports about $4 billion worth of steel every year and he is concerned about shortages.

“We’ve got concerns,” Kahlon said. “And we are having conversations with the federal government just to say, ‘We understand where you want to go. We understand why. But there has to be ways for us to get there without hurting ourselves along the way.’”

B.C. and Western Canada may be at more risk than Eastern Canada, including Ontario and Quebec where there are more steel mills.

The challenge of matching steel demand to steel supply is that no one knows exactly how much steel is in the country: Construction companies typically bid on projects years in advance and keep inventory in lots. Some companies may also have stockpiled inventory at the first signs of the trade war.

But a lobbying group for the domestic steel production industry — which would be the biggest beneficiary of a reduction in foreign imports — continue to push for more restrictions, and so far Carney has gradually moved in their direction.

In June, for example, the federal government announced “tariff rate quotas” that limit countries that do not have a free trade agreement with Canada to importing no more steel than they imported last year.

Then In mid-July, he announced a tightening of those policies. Non-free trade countries are now limited to importing half of the volume they imported in 2024 and free trade countries can only import the volume they sent to Canada in 2024. Any steel in excess of that quota triggers a 50 per cent tariff.

Catherine Cobden, president of the Canadian Steel Producers Association, said the industry was hoping that non-free trade countries would be limited to 20 per cent of what they sent to Canada in 2024.

“We are relieved to see some help,” she said, “It’s certainly a step in the right direction, but it won’t close the losses.”

Cobden said that Canada’s market is way too open: She noted that Carney said the U.S. relies on foreign steel for less than one third of its demand and foreign steel supplies one-sixth of the European Union’s demand, whereas in Canada that ratio is closer to two-thirds.

Even many countries that signed free trade agreements with Canada have dumped steel here — a technical term for selling it below the cost of production, or less than what it sells for in their home market, Cobden added.

“The world has a significant overcapacity in steel production,” she said. “Metal flows all over the world, and if it ends up in Canada, that’s the problem we need to address.”

Still there is the issue of Canadian geography. While Cobden said the country’s domestic mills are capable of shipping products to Western Canada, builders and others in British Columbia and elsewhere say in practice it is often prohibitively expensive to ship steel by rail across the country.

As a result, British Columbia has repeatedly requested that Carney carve out their province from steel import restrictions because of the harmful effect it could have on its economy.

“I think we’re not convinced at this point that we have the (domestic steel) capacity to meet the demand we have,” Kahlon said.

Meanwhile, McMenamin and other steel importers say they understand why Ottawa would impose restrictions on certain types of steel, such as flat-rolled steel, which is primarily what domestic steel mills produce for the U.S. market.

But he and others argue that the measures announced in mid-July and

formalized in a customs notice on Aug. 1 are actually more restrictive than anticipated because there are multiple layers.

For example, steel rebar had been subject to import quotas within the broader category of what is known as “long steel” products, but the new order creates a specific quota for rebar. It also says that no country can account for more than 29 per cent of the import quota.

McMenamin said his order from the Philippines contained 28,800 tonnes of steel rebar. But under the federal policy, no more than 33,613 tonnes of rebar can be imported per quarter from all non-free trade countries, of which the Philippines is only one of many. In addition, no more than 29 per cent of that can come from a single country, which amounts to about 9,700 tonnes.

That meant that while the ship was in transit, the federal government adjusted its policy such that he might have faced a 50 per cent tariff on about 19,000 tonnes, which he estimated would have added around $7 million to the total cost, if he did not already have an existing import licence for the shipment.

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“We would have (had) no choice but to increase the price in the market,” he said, adding that who would ultimately foot the bill would be a messy dispute between importers, distributors and developers.

In the end, the ship landed and cleared customs without having to pay the new duty, but McMenamin said he has paused making any new import deals because there’s too much uncertainty about how federal restrictions will evolve.

McMenamin said the current federal policy was “unfair” and “punitive,” and predicted that as steel prices rise, housing projects will be delayed, perhaps even cancelled.

“That’s where the big pain is — when projects get cancelled,” he said.