UPDATE 1-Tenaris lays off Canadian workers as Trump steel tariffs bite

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WINNIPEG, Manitoba, July 1 (Reuters) - Steel pipe maker Tenaris SA is temporarily laying off workers and adjusting production at a Canadian plant because of uncertainty in the steel market following tariffs imposed by the United States, a company official said.

The first publicly disclosed job losses in the Canadian steel industry since the Trump administration's metal tariffs were disclosed in March takes effect the same day as Canada's retaliatory trade action against the United States takes hold. The job cuts were announced on Saturday.

Canada is striking back at the United States on the tariffs, slapping punitive measures on C$16.6 billion ($12.6 billion) worth of American goods, ranging from steel products to maple syrup to orange juice, starting on Sunday. The government also unveiled an aid package of up to C$2 billion to protect steel and aluminum sectors and related industries.

Canada joins the European Union and China is taking retaliatory trade actions in response to U.S. decisions.

The escalating trade tensions between the two neighbors has driven bilateral relations to their lowest point in decades. U.S. President Donald Trump has repeatedly said Canada was profiting from U.S. trade, and launched a blistering attack on Prime Minister Justin Trudeau, describing him as "very dishonest and weak" at the end of the Group of Seven leaders meeting in Canada earlier this month.

Representatives for Foreign Minister Chrystia Freeland, who unveiled Canada's retaliatory measures on Friday, were not immediately available for comment on Sunday as the nation is celebrating its 151 birthday. Britain ruled Canada before 1867.

'UNSUSTAINABLE MARKET'

But for the 40 laid-off workers at Luxembourg-based Tenaris' AlgomaTubes plant in northern Ontario, July 1 brought bad news as the company adjusts output because of the U.S. tariffs on steel and aluminum imports.

"The implementation of a tariff has created an unsustainable market to serve our U.S. customers," David McHattie, a vice president for Tenaris Canada said, adding that the employees were hired in January to meet new demand for Tenaris products.

Reuters reported on June 27 that steel pipes and tubes used in drilling and transporting crude oil has flooded into Canada this spring, as Trump's steel tariffs forced producers from Asia to seek new markets, threatening jobs in the Canadian pipe-making sector.

Non-U.S. imports of drill pipe, casings and line pipe jumped 90 percent in April from a year earlier and their total value soared 80 percent to C$183 million ($137.3 million), customs data analyzed by Reuters showed.

McHattie did not elaborate on production adjustments and declined to share employment levels or sale volumes for competitiveness reasons.

Tenaris has been operating in Canada for the past 50 years and is a big supplier to the country's energy industry.

The U.S. tariffs took effect on March 23, though some U.S. allies including Canada were exempted until May 31. Canadian retaliatory tariffs took effect on Sunday.

Canadian authorities can levy special duties on unfairly subsidized steel, or temporarily restrict imports during a sudden surge with a "safeguard action."

The Wall Street Journal reported this week that the Canadian government is considering putting quotas or tariffs on certain steel imports from all its trading partners, citing people familiar with the matter. (Reporting by Rod Nickel in Winnipeg, MANITOBA, Additional reportin by David Ljunggren in OTTAWA Writing by Denny Thomas; Editing by Christian Schmollinger and Jeffrey Benkoe)