China has escalated a growing trade dispute with Canada by filing a formal complaint with the World Trade Organization (WTO) over tariffs imposed on Chinese steel products.
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Beijing’s WTO complaint comes as Canadian steelmakers such as Algoma Steel (ASTL), Stelco, and Teck Resources (TECK) are already reeling from U.S. tariffs of 50% placed on Canada’s steel products. China claims that Canada’s tariffs on its steel products are “discriminatory.”
China has appealed to the WTO after Canadian Prime Minister Mark Carney announced last month that he was imposing a 25% surtax on products containing Chinese steel to protect the domestic industry in the wake of the steep American import duties.
Escalating Tensions
The current spat over steel is the latest in a series of escalating trade and political tensions between Canada and China. The two countries have been battling on the trade front ever since Canada ratcheted up its import tariffs on Chinese electric vehicles to 100% on Oct. 1 of last year.
In response, China slapped a 76% tariff on Canadian canola products, dealing a blow to Canada’s agriculture sector. The ongoing situation is requiring Canada to fight trade wars against the world’s two biggest economies – the U.S. and China – simultaneously. The U.S. and China are Canada’s two biggest export markets.
Is ASTL Stock a Buy?
The stock of Algoma Steel has a consensus Moderate Buy rating among three Wall Street analysts. That rating is based on one Buy and two Hold recommendations issued in the last three months. The average ASTL price target of $7.28 implies 50% upside from current levels.
