Canadian steel companies pay US$19 million to settle allegations they lied about their steel shipments

Canada's steel import regulations are too lax, say U.S. trade representatives, which allows other countries to transship their steel through Canada and then into the U.S. Photo by Luke Hendry/Postmedia

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Two Canadian steel companies and one of their part owners agreed to pay US$19 million as part of a settlement with the United States Department of Justice (DOJ) that they illegally circumvented duties on steel from China, Indonesia, Italy, Turkey and Vietnam.

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Brampton, Ont.-based Royal Canadian Steel Inc., Farjess Inc. and Feroz Jessani, president and part-owner of the two companies, allegedly misrepresented the steel as being from Canada or the U.S., according to the DOJ.

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Jessani did not respond to emails and the person who picked up the phone at Royal Canadian Steel said he is currently on vacation outside of Canada.

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Royal Canadian Steel has a processing plant in Brampton and other facilities in China, Pakistan and India, according to its LinkedIn page.

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In the U.S., companies must declare the country of origin and value of the goods being imported to U.S. Customs and Border Protection (CBP).

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Between May 2019 and January 2025, Royal Canadian Steel, Farjess and Jessani avoided duties by “knowingly misrepresenting … the country of origin of certain flat-rolled steel,” the DOJ said.

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Shamsh Dhala, a broker who worked with Farjess, tipped the government off by filing a civil suit in the U.S. under the False Claims Act, which allows whistleblowers to receive a portion of any money recovered by the government. The DOJ said Dhala would receive US$3.61 million of the settlement.

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“Our border is the frontline of American industry. Approximately half of all U.S.-Canada land trade flows through our district.” Jerome Gorgon Jr., U.S. attorney for the Eastern District of Michigan, where the case was filed, said in a press release. “And we will continue to protect our businesses from foreign fraudsters.”

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U.S. steel companies have long complained that Canada has acted as a backdoor for cheaper, unfairly subsidized steel to enter the U.S. They, along with U.S. trade representatives, said Canada’s steel import regulations are too lax, which allows other countries to transship their steel through Canada and then into the U.S.

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Last year, U.S. President Donald Trump placed 25 per cent tariffs on Canadian steel, which he eventually doubled to 50 per cent under section 232 of the Fair Trade Act. That has affected all steel exports, including those that comply with the Canada-U.S.-Mexico Agreement, and devastated domestic steel producers, many of whom relied on the U.S. for a major portion of their sales.

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Sault Ste. Marie, Ont.-based Algoma Inc., the only independently owned domestic mill in Canada, said the U.S. accounted for more than half of its revenues before the tariffs. It accepted a $400-million federal loan last year, and former chief executive Michael Garcia said the company could have faced insolvency without the support.