Good morning.
Thank you to the chair and the committee for inviting me to present on behalf of the Canadian Institute of Steel Construction, representing one of the foremost sectors impacted by the U.S. section 232 tariffs.
Last week we held our day on the Hill and had the opportunity for our members from across Canada to meet with many of you. Thank you for your time then and for today's opportunity to further discuss policies to support our industry. Thank you as well for allowing me to do this from an Atlanta hotel room, where I'm attending the North American Steel Construction Conference.
CISC is Canada's voice for the steel construction industry, representing the steel manufacturers, fabricators, suppliers, constructors, engineers and architects who are building Canada's infrastructure with steel. As we were able to share with you last week, the steel construction sector directly employs 30,000 workers from Newfoundland to Vancouver Island and supports 100,000 jobs in total.
As of April 2, the U.S. government is tariffing steel melted and poured in its own country if additional work is done in Canada and then it is sold back into the United States. Now, the entire value of the product is being tariffed, not just the value of the steel. This further increases costs and challenges for our industry. Let me be clear: These measures also harm America's own self-interest.
For decades, we had established, reliable supply chains between our two countries that benefited businesses and communities on both sides of the border. The United States does not have the domestic supply and capacity to meet demand. Costs for primary and fabricated steel are rising in the U.S. as a result of the President's unilateral actions, just as they did in 2018. Lead times for projects are increasing rapidly. The U.S. is putting the entire North American steel industry at a disadvantage, while also performing the single greatest act of dishonourable conduct as neighbours, allies and business partners in our long-standing relationship. While they appear to be happy to make a deal with the devil, compromising long-held free market principles to fatten their profit margins, the harm in their encouragement of a megalomaniacal President will have long-term consequences.
The ever-shifting tariff policies, with no clear end in sight, have created significant instability for the sector and made it difficult to plan for future projects on both sides of the border. The U.S. is Canada's largest export market for fabricated steel, and the loss of this market has a substantial impact on the industry. Since the heightened measures were announced earlier this month, we've already heard from members that large contracts in the U.S. are now at risk.
We appreciate the many measures the government has enacted to support the steel sector and other impacted industries, including the formation of the steel task force, trade measures and the buy Canadian policy. As this committee reviews policies to support the industry, the CISC recommends doubling the 25% derivative surtax against non-FTA countries, applying the buy Canadian policy to all taxpayer-funded projects and considering introducing a steel investment and jobs fund.
As we are seeing in the prices of jobs we're bidding on, the current 25% derivatives surtax does not come anywhere close to levelling the playing field between the domestic fabrication sector and countries like China, who continue to dump steel into the Canadian market that is far below the cost of raw domestic steel. It's for these reasons that we recommend the government double the steel derivative tariff on non-FTA countries to 50%. This would be in line with the 50% tariff rate quota on non-FTA countries for primary steel. This measure will also support us in our long-term relationship building with the U.S., which wants to ensure that Canada is not a back door for dumped steel entering the North American market.
Our second recommendation is that our best growth market is our own, so CISC applauds efforts to support manufacturers through the buy Canadian policy. It is estimated that if the U.S. export market were entirely lost, our industry could lose between 3,500 to 5,200 jobs, including upstream and downstream employment effects. The potential job gains from replacing imports with domestic production would range from 10,700 to 16,700 jobs. Currently, the buy Canadian policy only applies to projects where the federal government is the procuring party. When the federal government provides funding to provinces and territories and municipalities for projects such as new schools or hospitals, the buy Canadian policy, or an equivalent provincial policy, should be applied as a requirement to receive federal dollars. The federal government should also work closely with the provinces and territories to align legislation, funding agreements and first ministers' commitments to establish consistent buy Canadian and local steel requirements on all taxpayer-funded infrastructure projects.
Our final recommendation, should we continue to face trade challenges, is to develop a fund via tariff revenues to finance retooling and capacity expansion, workforce training, R and D in advanced and low-carbon steel, and business development initiatives so that increased demand is met by Canadian production—not imports. This is a recommendation of last resort. Let me be clear about that. Our members just want to work, so we believe that implementing recommendations one and two should suffice on their own.
Once again, thank you to the committee for inviting me to appear on behalf of the Canadian Institute of Steel Construction. I look forward to answering any questions you may have.