Jack Mintz: Picking today’s winners and tomorrow’s losers

I buy terrific coffee from the The Roasterie in Calgary even though I have to pay shipping costs to Toronto. Now that the federal government has pledged $100 million (for starters) to pay 50 per cent of the cost of shipping steel within Canada, I wonder if it could do that for roast coffee, as well? Somebody else would be paying my freight but, really, it’s a trivial amount.

The steel industry is obviously much more important than coffee roasting. Steel companies, primarily in Quebec and Ontario, employ 23,000 people and produce over 12 million tonnes of steel a year. But some aren’t competitive, so we foolishly throw subsidies and tax breaks at them. In the case of the almost literally never-ending saga of Algoma, subsidies totalled $800 million from 1992 to 2021, with another $500 million in 2025 in tariff relief.

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Why do we distort the market in favour of some products or firms and not others? One argument is that other countries protect certain industries so we need to do the same. Under CUSMA, 90 per cent of our steel exports were generally going to the U.S. tariff-free. Now, steel companies are being hammered by U.S. tariffs as high as 50 per cent. But autos, lumber, and copper, aluminum, and their derivatives are also being hurt by Trump tariffs. Shouldn’t their transport costs be subsidized, too? And what about agriculture, which was hit hard by Chinese import restrictions?

Today, international trade is being grossly distorted by grants, tax concessions and cheap government credit under the guise of industrial policy. Importing countries then counter it all with tariffs and quota restrictions to protect their own industries. Resources are being badly misallocated as governments pick winners today that become losers tomorrow (ask Ontario and Quebec about EV subsidies). It’s costing governments a bundle of taxpayer money and making many rich investors even richer. Is this an economic war countries should be fighting?

A June report by the OECD estimates that subsidies across 15 major industries totalled US$108 billion in 2024, accounting for 1.3 per cent of company revenues. That’s up 55 per cent since 2015. Tax concessions were the most bountiful component in 2024, at US$41 billion. The most heavily subsidized industry was solar (3.2 per cent of firm revenues) followed by electronics (2.1 per cent), aluminum (1.7 per cent) and steel (1.3 per cent).