As U.S. President Donald Trump continues his campaign to impose tariffs on imports from Canada, some U.S. industries are accusing Canadian competitors of using cheap materials from China in ways that violate free trade rules and undermine American companies.
The allegations emerged during a recent public hearing in Washington on the future of the Canada-United States-Mexico Agreement (CUSMA). During the hearing, leaders from a wide range of business sectors called on the Trump administration extend trade deal when it comes up for review in July.
However, some industries—from steel producers to truck parts suppliers to kitchen cabinet makers—have expressed concern that some Canadian and Mexican companies are taking advantage of CUSMA's preferential trade terms by sending products with significant amounts of Chinese content into the U.S. market through the back door.
Luke Meissner, counsel for the Kitchen Cabinet Alliance of America, said at the hearing that Canada and Mexico have become conduits for products from China, bypassing the massive countervailing duties the U.S. imposed on Chinese-made kitchen cabinets and materials in 2020.
“China didn’t leave the U.S. market, it just changed the return address,” Meissner said. “We have closed the front door to China. Canada and Mexico became side doors.”
Business leaders in Washington defended the Canada-United States-Mexico Trade Agreement (CUSMA) Thursday during the second day of high-stakes hearings. People testifying from all three countries said a U.S. withdrawal from CUSMA, as U.S. President Donald Trump has threatened, would be disastrous for the North American economy.
Over the past five years, Canada has “dramatically increased” imports of Chinese-made cabinets and cabinet materials such as plywood, medium-density fiberboard (MDF) and moldings, while increasing exports of manufactured cabinets to the United States, Meissner said.
“USMCA should reward real production, not cheap assembly of foreign parts,” he said, using the U.S. acronym for the trade agreement.
The Trump administration has struck 25 percent tariff on imports of cabinets and vanities from Canada and many other trading partners in October, a tariff that will rise to 50 percent on January 1.
The tariff was ostensibly intended to slow the flow of Chinese-made cabinets into the US from third countries, but this is not the case. included in products actually made in Canada Also.
The Canadian Kitchen Cabinet Association defends its products as Canadian and says U.S. tariffs will result in even more foreign goods 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.
Concerns about steel imports into Canada from China
U.S. companies that make or use steel in production have also accused Canadian firms of undermining American businesses by using cheap raw materials from China.
Robert Wahlin, president and CEO of Stoughton Trailers, a Wisconsin-based maker of transportation equipment such as cargo trailers, said his biggest concern is the product of a competitor wholly owned by China International Marine Containers Ltd. (CIMC).
“In many cases, products will be packaged and shipped to Canada from China, go through some final assembly and then transported to the U.S.,” Whalin told CBC News in Washington.
“But all these products are made in China. So they have a predominantly Chinese workforce, 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 'militantly' advocates preventing cargo transhipment
Eric Miller, an expert on trade policy between Canada and the United States, argues that Canada is not nearly as much of a backdoor for Chinese steel as American companies make it out to be.
“Canada has been very hawkish about preventing Chinese transshipment because it knows its own access to the U.S. market is at stake,” Miller, president of D.C.-based Rideau Potomac Strategy Group, told CBC News.
Miller says Mark Carney's government is particularly strict about keeping Chinese steel out of the Canadian market.
“Any objective look at Canada's track record will show that Canada has repeatedly taken significant action over the past decade to try to control Chinese steel imports,” he said.
Several business leaders involved in the US steel industry have called on the Trump administration to negotiate stricter terms in CUSMA to limit the amount of non-North American content in products to qualify for duty-free access.
Among the changes they are calling for: Canada and Mexico should impose tariffs on steel imports from outside North America equivalent to U.S. tariffs, effectively creating a common steel tariff regime among 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 have been too careless 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 ground for excess steel production capacity,” Farris told CBC News in Washington.
All Canadian steel and aluminum exports to the United States are currently subject to 50 percent tariffs imposed last spring by the Trump administration.
Canadian and U.S. officials were negotiating an agreement to change those tariffs in late October when the president called off talks sparked by an anti-tariff television advertising campaign by the Ontario government.
The U.S. also imposes tariffs that include 25 percent on some automobile imports from Canada, 10 percent on energy and potash imports, and 35 percent on most other categories of goods.
However, products that qualify under CUSMA are exempt from duties, allowing the vast majority of Canadian exports to the United States to be subject to zero duties.
Hank Holland, CEO of Amaero Ltd., a Tennessee-based manufacturer of titanium products, says Canadian firms import raw materials—titanium feedstock—from China at much lower prices than his company does because Canada imposes much lower tariffs on Chinese material than the United States.
Canadian companies then sell titanium products into the U.S. duty-free under CUSMA, Holland said.
“Our Canadian competitors have repeatedly touted the USMCA exemption to their customers and investors as a competitive advantage over American manufacturers such as Amaero,” Holland said at the hearing.
He called for changes to the trade agreement to ensure all three countries treat Chinese titanium raw materials equally.
“We must maintain and protect our sovereign capabilities and close the backdoor into the U.S. market that is hurting American producers,” Holland said.
Complaints from all these sectors have caught the attention of Jamison Greer, the Trump-appointed US trade representative.
Greer told U.S. senators Tuesday that one of the key considerations for a trade deal with Canada and Mexico is tightening rules of origin.
“We need to make sure that the terms of the agreement benefit American manufacturers and workers,” Greer said during testimony before the Senate Appropriations subcommittee.
“Rules of origin need to be looked at because I want to make sure that the benefits of the agreement go to the parties to the agreement and not to some third country somewhere in Asia.” – Greer said.
Under federal law, Greer is required to report to Congress by January 2, 2026, on his recommendations to extend or renegotiate the trade agreement. All three countries are due to announce their position on revising or extending the agreement on July 1.
“I expect that in January I will meet with the Canadians and then the Mexicans, maybe separately, just to talk to them separately about what this looks like going forward,” Greer told senators.
