Commonwealth_ Canada unveiled a policy to limit tariff-free imports of cheap foreign steel as part of the measures to safeguard its local steel industry against the effects of US tariffs. The move, announced by Prime Minister Mark Carney, is meant to hit Canadian producers who are burdened by the tariffs imposed by the US and are making moves to cut the country’s over-reliance on steel commerce with the US.
Announcing at an Ontario news conference, the prime minister detailed the government’s intention to diversify Canada’s trade with nations beyond the United States and to place a renewed focus on further strengthening the use of Canadian steel in Canadian industries and projects.
The US administration of President Donald Trump imposed a series of retaliatory tariffs before making this decision. Export of Canadian steel was initially affected by a tariff increase of 25% in March, followed by a further rise to 50% in June. The drastic alteration of trade flows by such tariffs has put Canada’s steel sector under threat, prompting quick government action.
The prime minister referred to the astounding scale of Canada’s reliance on the United States for exporting and importing steel. To date, imports have supplied nearly two-fifths of domestically consumed steel, and over 90% of steel exports from Canada are headed to America. Future trade policy changes and tariff volatility have rendered this reliance unsustainable.
Canada intends to address these challenges by imposing more stringent tariff rate quotas on foreign steel imports that do not originate from free trade agreement nations. The current tariff-free import quota of up to 100% of 2024 volumes of steel imports will be reduced by half. Any import above this will be subjected to a 50% tariff to deter dependence on foreign steel and encourage the use of domestic steel instead.
The government is also targeting Chinese steel imports, with a second tariff to be imposed on steel products “which contain steel melted and poured in China” imported into other countries instead of the US. The action is intended to respond to fears that steel is evading tariffs by transshipping via third countries.
Despite these new restrictions, the government pledged that such excluded products under the Canada-US-Mexico free trade agreement (CUSMA) would not be affected, providing an uninterrupted level of trade activity with its key North American partners.
In addition to the trade restrictions, the federal government will also be revising the procurement regulations to require government project contractors to source the full utilization of Canadian steel. The policy change aims to boost demand for Canadian steel and encourage domestic producers through massive infrastructure and development projects.
Some of the priority areas on the agenda for this expanded use of Canadian steel include gargantuan construction initiatives towards enhancing the supply of houses and supporting the country’s homegrown defense industry. The investments will create steady demand for Canadian steel products, enabling economic growth and industrial stability.
The government policy is evidence of a master plan to reinforce the country’s industrial base and meet exposure to foreign trade pressures. Through curbing tariff-free steel imports and boosting domestic demand, Canada aims to preserve jobs, maintain manufacturing capacity, and attain a more balanced and insulated steel industry.
Canada’s steel and aluminium industry has been among the hardest hit by sector-specific tariffs imposed by the US administration, affecting prices, competitiveness, and access to markets. The new proposed measures are part of an ambitious agenda to counteract these effects and push for a more sustainable Canadian steel producer future.
In effect, Canada’s imposition of more stringent import quotas and additional tariffs on certain steel products is a substantial move in the direction of safeguarding its domestic steel industry. These policies, combined with a realignment that favours Canadian steel in government procurement and large infrastructure projects, demonstrate a heightened effort to reduce reliance on US trade and build a stronger, more robust domestic steel industry.
