U.S. businesses claim Canada is a back door for products from China

As U.S. President Donald Trump sticks with his campaign of tariffs on imports from Canada, some American industries are accusing Canadian competitors of using cheap materials from China in ways that violate free trade rules and undercut U.S. companies.

The accusations emerged during recent public hearings in Washington into the future of the Canada-U.S.-Mexico Agreement (CUSMA). During the hearings, leaders from a wide range of business sectors urged the Trump administration to renew the trade deal when it comes up for review in July.

However, several industries — from steel producers to truck-parts suppliers to kitchen-cabinet makers — expressed concerns that some Canadian and Mexican companies are exploiting CUSMA’s preferential trade terms by sending products with significant amounts of Chinese-made content into the U.S. market through a back door.

Luke Meisner, counsel for the American Kitchen Cabinet Alliance, told the hearings that Canada and Mexico have become conduits for products from China, circumventing the hefty countervailing duties the U.S. imposed on Chinese-made cabinets and materials in 2020.

"China didn't leave the U.S. market, it just changed the return address," Meisner said. "We closed the front door for China. Canada and Mexico became the side doors."

Over the past five years, Canada "dramatically increased" its imports of made-in-China cabinets and cabinet materials — such as plywood, medium-density fibreboard (MDF) and moulding — while at the same time boosting exports of finished cabinets to the U.S., Meisner said.

"The USMCA should reward real manufacturing, not low-cost assembly of foreign parts," he said, using the U.S. acronym for the trade agreement.

The Trump administration slapped a 25 per cent tariff on imports of cabinets and vanities from Canada and many other trading partners in October, a duty that is set to rise to 50 per cent on Jan. 1.

The tariff was ostensibly aimed at slowing the flow of Chinese-made cabinets into the U.S. from third countries but it is hitting genuinely made-in-Canada products as well.

The Canadian Kitchen Cabinet Association defends its products as Canadian-made, and says the U.S. tariffs will result in even more foreign products being dumped into Canada.

"Our industry also needs protection from cheap foreign imports entering our country," the association told CBC News in a statement.

Concern over Canada's steel imports from China

U.S. companies that produce steel or use it in manufacturing also accused Canadian firms 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 chief concerns are the products of a competitor that’s wholly owned by China International Marine Containers Ltd. (CIMC).

"In a lot of cases, the products will be kitted and moved into Canada from China, and they go through some finished assembly and then they're moved into the U.S.," Wahlin told CBC News in Washington.

"But all of that product originates in China. So they've got predominantly Chinese labour, Chinese steel, Chinese aluminum," he said.

Wahlin told the hearings that the current terms of CUSMA "allow third countries to exploit loopholes in the agreement to target the U.S. market."

Canada 'militant' about preventing trans-shipment

Eric Miller, an expert on Canada-U.S. trade policy, argues that Canada is nowhere near as much of a back door for Chinese steel as the American companies make it out to be.

"Canada is quite militant about its prevention of Chinese trans-shipment, because it knows that its own access to the U.S. market is on the line," said Miller, president of D.C.-based Rideau Potomac Strategy Group, in an interview with CBC News.

Miller says Mark Carney's government has been particularly rigorous about keeping steel from China out of the Canadian market.

"Any objective look at Canada's track record would say that repeatedly over the last decade, Canada has seriously put in place measures to try to control imports of Chinese steel," he said.

Several business leaders involved in the U.S. 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.

Among the changes they’re calling for: Canada and Mexico should impose tariffs on steel imports from outside North America equivalent to U.S. duties, effectively creating a common regime for steel tariffs among the CUSMA countries.

Brandon Farris, vice-president of the Steel Manufacturers Association, whose members account for 70 per cent of U.S. domestic steel production, says Canada and Mexico are too lax about  allowing the 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 capacity for steel," Farris told CBC News in Washington.

All Canadian steel and aluminum exports to the U.S. currently face tariffs of 50 per cent, imposed last spring by the Trump administration.

Canadian and U.S. officials were negotiating a deal to alter those tariffs in late October when the president called off the talks, triggered by the Ontario government’s anti-tariff television ad campaign.

The U.S. is also applying tariffs that include 25 per cent on certain automotive imports from Canada, 10 per cent on imports of energy and potash and 35 per cent on most other categories of goods.

However, products that meet CUSMA’s terms are exempt, allowing the vast bulk of Canadian exports into the U.S. with zero tariffs.

Hank Holland, chief executive of Amaero Ltd., a Tennessee-based manufacturer of titanium products, says Canadian firms are importing feedstock — the raw material for titanium — from China at far lower prices than his company can because Canada imposes far lower duties on the Chinese material than the U.S.

The Canadian companies then sell the titanium products in the U.S. tariff-free under CUSMA, Holland said.

"Our Canadian competitors have repeatedly touted the USMCA exemption to their customers and investors as a competitive advantage vis-a-vis U.S. producers such as Amaero," Holland told the hearing.

He called for changes to the trade deal to ensure that all three countries treat Chinese raw material for titanium equally.

"We must maintain and protect our sovereign capabilities and close the back door into the U.S. market, which harms U.S. producers," Holland said.

The complaints from all these sectors have got the attention of Jamieson Greer, the Trump-appointed U.S. Trade Representative.

Greer told U.S. senators on Tuesday that one of his key considerations for the trade deal with Canada and Mexico is tightening the 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 make sure that the benefits of the agreement go to the members of the agreement and not some third country in Asia somewhere." Greer said.

Under federal law, Greer is required to report to Congress by Jan. 2, 2026 his recommendations on renewing the trade agreement or renegotiating its terms. All three countries must declare their position on reviewing or extending the agreement on July 1.

"My expectation is that in January, I'll be sitting down with the Canadians and then with the Mexicans, maybe separately, just to talk to them separately, about what it looks like going forward," Greer told the senators.