Canada Curbs Tariff-Free Steel Imports to Aid Domestic Industry

Ottawa tightens quotas amid global trade pressures

Canada is implementing new restrictions on duty-free foreign steel, a significant policy shift aimed at bolstering its own producers grappling with international trade challenges. The move signals a protective stance as global market dynamics shift.

New Tariff Rate Quotas Introduced

The Canadian government will enforce tighter “tariff rate quota” levels for steel originating from countries without a free-trade agreement with Canada. Producers from these nations will be permitted to import only half of their previous year’s volume tariff-free. Shipments exceeding this threshold will face a substantial 50% tariff.

Steel-producing nations with established trade pacts, such as South Korea, will benefit from greater flexibility. These partners can continue exporting steel at 2024 levels before tariffs are applied.

Addressing U.S. Tariffs and Global Overproduction

Prime Minister **Mark Carney** stated that tariffs on U.S. steel remain unchanged as Canada negotiates a trade deal with the Trump administration before an August 1 deadline. He emphasized the dual pressure on Canada’s steel sector: “The current trade situation with the United States, and unfair trade practices from other countries — that combination guts our steel industry,” **Carney** said. “For Canada to build big things again, we need our steel industry to advance, not retreat.”

The Canadian Steel Producers Association lauded the government’s actions. CEO **Catherine Cobden** told BNN Bloomberg Television that the measures are “a big move forward.” She specifically applauded the 25% surtax on steel imports from countries other than the U.S. that contain steel melted and poured in China, highlighting China’s massive production capacity as a potential market disruptor.

Canada’s steel manufacturers have warned of substantial job losses due to tariffs. The industry reports reduced shipments and nearly 1,000 job cuts have already occurred. Canada has maintained a 25% retaliatory tax on U.S. steel products, choosing not to match U.S. levies.

Carney also noted that U.S. trade deals with other nations might incorporate high tariffs, potentially redirecting steel products into Canada’s more accessible market. “It’s important that we protect our market from those secondary effects,” he explained.

Support for Workers and Domestic Procurement

In a parallel move, the federal government is introducing changes to its procurement rules, mandating that companies holding government contracts must source steel from Canadian producers. This policy aims to create a domestic demand buffer for the industry.

Additionally, the government is allocating C$70 million (approximately $51 million) for training and income support for up to 10,000 affected steel workers. A C$1 billion fund is also being established to assist steel firms in advancing new projects. According to the World Steel Association, global crude steel production reached over 1.8 billion tonnes in 2023 (World Steel Association 2023).

Carney concluded, “We have the potential to become our own best customer for steel, but we will lose that ability if we don’t manage the profound transformation now underway in the industry.”

Shares of Algoma Steel Group Inc. saw a positive reaction, rising 4.5% in Toronto trading.