Question Period Note: IMPLICATIONS OF CHANGES TO SECTION 232 TARIFFS ON STEEL, ALUMINUM, AND COPPER

What are the impacts of the April 2026 Section 232 tariff changes for metal derivatives on Canadian manufacturers, and mould-makers in particular?

• Recent changes to the application of steel, aluminum, and copper derivative tariffs represent a serious threat to Canadian industry and workers, with effects that could cascade across the economy.

• That’s why the Government of Canada is taking action to support the viability and competitiveness of our industries.

• Through the Business Development Bank of Canada as well as tariff response funding through the Regional Development Agencies, the Government is strengthening domestic industrial capacity through strategic investments – supporting innovation, expanding productive capabilities, and building the resilient supply chains needed for long-term economic security.

• The Government of Canada remains ready to engage with the United States to reach a stable and predictable agreement that delivers the right outcome for Canadians.

• On April 2, 2026, the U.S. revised its Section 232 tariff treatment for certain steel, aluminum, and copper products, effective April 6, 2026.

• The changes restructured the covered products into new categories and extended full-value tariff treatment to many derivative goods that had previously been assessed based only on metal content. As a result, downstream manufacturers exporting metal-intensive products to the U.S. may now face materially higher effective tariff burdens.

• The regime is organized into four main annexes relevant to product coverage:

o Annex I-A: products generally subject to a 50 percent tariff on the full customs value of the imported good. This annex is concentrated in core steel, aluminum, and copper articles, as well as some derivative products.

o Annex I-B: products generally subject to a 25 percent tariff on the full customs value of the imported good. This annex contains a broader range of derivative and downstream manufactured goods.

o Annex II: products removed from scope under the revised regime. These goods are no longer subject to the revised Section 232 steel, aluminum, or copper tariffs.

o Annex III: certain industrial and electrical equipment products that receive temporary reduced treatment through December 31, 2027. After that date, these goods generally revert to the standard Annex I-B treatment.

• The revised regime also includes certain exclusions, reduced-rate treatment for some products, and limited drawback provisions, although the practical value of these mitigation measures remains uncertain.

• Although the tariffs are focused on steel, aluminum, and copper, their implications extend well beyond those sectors because these metals are foundational inputs embedded in many manufactured products. Impacts will be felt across a broad range of industries, including industrial machinery, agricultural equipment, trailers and parts, heating and cooling systems, electricity and power distribution equipment, rail cars, and consumer products such as snowmobiles and barbecues.

• The tool, mould, and die industry provides a clear example of a sharp increase in the tariff exposure for Canadian manufacturers. Moulds contain substantial amounts of steel or aluminum by weight, but much of their value is derived from high-precision engineering, design, machining, programming, testing, and specialized labour. As a result, the shift from tariffing metal content to the full value of the finished product has a disproportionate effect on the sector.

• Firms in this industry typically operate on single-digit margins and firms may be forced to confront difficult options: shutting down operations, relocating production to the U.S., or attempting to reduce duty-exposure through alternative approaches.

• The risk is that, as firms face growing financial pressures from reduced export competitiveness, they may be unable to sustain production and continue supplying the Canadian market. The mould-making sector supports a wide range of Canadian manufacturing activity, including autos and parts, electronics, medical equipment, aerospace, and other advanced manufacturing segments. These industries may, in turn, face competitiveness and viability challenges if they face disruptions in their supply of intermediate goods.

• Canada is taking clear action to protect workers and industries as U.S. tariff measures create broad global uncertainty and continue to disrupt integrated North American supply chains.

• A strong and competitive manufacturing base is vital to Canada’s future prosperity. Canada is taking steps to anchor high-value production at home, support advanced manufacturing, and position firms to complete globally in an increasingly risky economic environment.

• The tool, mould and die industry is one area that is particularly exposed. The tool, mould, and die sector directly employs approximately 13,000 workers in Southern Ontario, with 90 percent of exports destined for the U.S. market, making it acutely vulnerable. The most notable cluster of these firms is in the Windsor metropolitan area. While the mould-making industry’s products are often exported to the U.S. market, its products are also foundational to a wide variety of Canadian manufacturing activity.