Canada Seeks to Protect its Steel Industry from Imports, Tariff Turmoil

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Written by Daniel Graeber for Industrial Info Resources (Sugar Land, Texas)--The Canadian government says it is reviewing its trade deals for steel, in line with any progress in trade talks with the United States.

"Our steel industry will be central to Canada's competitiveness, our security, and our prosperity," Canadian Prime Minister Mark Carney said Wednesday. "As Canada moves from reliance to resilience, Canada's new government is taking a series of major measures to support, reinforce, and transform the industry to be more resilient in the face of profound shifts in global trade and supply chains."

Carney announced new tariff changes aimed at reducing foreign steel imports that impact the Canadian market.

Canada will tighten its tariff rate quota for steel products from countries that do not have a free trade agreement (FTA) with Canada, including China. Any steel products exported to Canada from non-FTA countries in excess of half the amount that was shipped in 2024 will be subject to a 50% tariff.

The previous tariff quota for non-FTA countries was set at any steel shipments in excess of 100% of the amount shipped in 2024. The quota level was tightened in response to concerns that China and other non-FTA countries would flood the Canadian steel market with imports due to high U.S. steel tariffs, according to news reports. China has been accused of selling its export products at a lower price than it can get in the domestic market, a practice known as dumping. Carney's initiative is meant to limit how much steel Canada can import from suppliers outside North America, while propping up its domestic market.

"Second, for non-U.S. partners with which we have an FTA, Canada will introduce a tariff rate quota level for steel products at 100% of 2024 volumes and apply a 50% tariff on steel imports above those levels," according to Carney's Wednesday announcement.

Canada's existing arrangements with its United States-Mexico-Canada Agreement (CUSMA) partners (the U.S. and Mexico) will remain the same, including no changes to its current trade measures with the U.S.

Canada will also implement additional tariffs of 25% on steel imports from all non-U.S. countries containing steel melted and poured in China before the end of July, Carney announced.

"These measures will ensure Canadian steel producers are more competitive by protecting them against trade diversion resulting from a fast-changing global environment for steel, creating more resilient supply chains, and unlocking new private capital in Canadian production," a government statement read.

Canadian leaders were alarmed by the return of Donald Trump to the White House for a second, non-consecutive term. Revising the North American Free Trade Agreement (now the CUSMA) during his first term, Trump has embraced protectionist trade policies and suggested Canada become part of the U.S. federal union.

Renewed trade talks between Canada and the U.S. resumed only after Canada in June scrapped a digital service tax.

The Canadian government said its steel sector is highly exposed to trade tensions as just over 50% of its domestically-produced metals head to foreign markets. Of that, 90% heads to the U.S. Trump, for his part, had already increased tariffs on steel and aluminum from 25% to 50% earlier this month.

North American trade arteries and supply chains are highly integrated. A vehicle can cross North American borders several times before it rolls off the assembly line. In the energy sector, the United States may be the vulnerable trading partner as domestic producers don't make the type of steel used in pipelines.

The Canadian government also said it would provide C$1 billion (US$730 million) to a strategic investment fund used to help steel companies build a resilient workforce and facilitate the production of steel products not yet made in Canada.

Before Carney's announcement, the Canadian steel industry said it was growing anxious.

In late June, Catherine Cobden, the president and chief executive officer of the Canadian Steel Producers Association, said Trump's tariff policies were unjustified and Canada should not stand idle.

"We appreciate the government's plan to reinstate a strong counter tariff package on the U.S. depending on how those discussions progress," Cobden said last month. "It remains a fact, however, that significant volumes of U.S. steel continue to enjoy the privilege of entering Canada tariff-free while we face a 50% tariff that has essentially closed the U.S. market to the Canadian industry."

Canada's low-carbon steel producers could find relief in the European Union. Following a gathering of ministers from the G7 in Alberta last month, Canada's prime minister announced his government had brokered a free-trade deal with the European Union.

The United States outpaces Canada in total steel production capacity, but Canada's sector is among the lowest polluters in the world.

Industrial Info is tracking 49 capital steel mill projects in Canada, valued at US$10.47 billion. Subscribers to Industrial Info's Global Market Intelligence (GMI) Metals & Minerals Project Database can click here for the project reports.

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