Question Period Note: CANADA’S STEEL AND ALUMINUM SECTORS - IMPACTS OF U.S. TARIFFS

What is the Government of Canada doing to support Canada’s steel and aluminum sectors considering U.S. tariffs?

• The Government of Canada is committed to maintaining a strong Canadian steel and aluminum industry and the good-paying jobs that come with it.
• In the face of U.S. tariffs, the government has taken decisive action to safeguard workers and businesses, including counter-tariffs, worker support programs, and funding measures to help steel and aluminium companies better serve the Canadian domestic market.
• The government continues to consult industry on further measures to counter unfair trade practices and restore access to the U.S. market.
• U.S. tariffs are hurting millions of people on both sides of the border by driving up costs, raising prices, and lowering demand.

• Any measure that shuts out Canadian steel and aluminum imports harms U.S. companies and the integrated supply chains that rely on long-term contracts and just-in-time delivery.
• Canada is deeply concerned about the ongoing inclusion of new derivative products applicable to steel and aluminum tariffs that will cause further harm to integrated supply chains that are imperative to our shared prosperity.
• Canada has responded to the tariffs by introducing a suite of countermeasures designed to help Canadian steel and aluminum companies remain competitive, while urging the U.S. to remove them as soon as possible.

The imposition of U.S. tariffs have significant consequences for Canada’s steel industry, introducing material financial injury and directly impacting firm operations. Concrete statistics on current and expected job losses are not yet available. However, initial estimates are in the high hundreds, with thousands at immediate risk.

Most major producers have reported a precipitous drop in shipments to the U.S. and other significant operational disruptions, forcing production adjustments and worker layoffs. Overall, the Canadian steel industry is doing extremely limited business with the U.S. with exports likely dropping by over a million tonnes of steel in the first two quarters. The administration’s widening of the scope of products for which the tariffs apply to, continually adding new derivative products, compounds these impacts even further.

Primary aluminum producers have not experienced the same level of acute and immediate impact as steel producers, primarily given high commodity prices and continued U.S. reliance on Canadian primary aluminum – the U.S. can only meet about one-third of its primary aluminum demand at full capacity. However, a sustained U.S. tariff rate of 50 per cent on Canadian aluminum exports is having an impact on the industry’s sustainability, as demand drops in response to high-prices and companies pull back on capital investment decisions.
For aluminum, the most significant near-term impacts of the tariffs, are being felt in the downstream aluminum sector which is much more reliant on two-way cross-border trade. Downstream aluminum producers continue to grapple with elevated input costs and constrained access to the U.S. market. While high prices benefit primary aluminum producers, it has significantly increased input costs for downstream firms, particularly SMEs, greatly eroding their profit margins.
The government has announced a series of measures to bolster its response, including:
• 25% tariffs on a list of US steel product imports worth $12.6 billion and aluminum products worth $3 billion

• Commitment of $5 billion, delivered through the new Strategic Response Fund (SRF), with flexible terms to help firms in all sectors, including steel and aluminum, impacted by tariffs to adapt, diversify and grow.

• Stricter tariff rate quotas (TRQs) to curb foreign steel imports. For non-Free Trade Agreement (FTA) countries, TRQs will be reduced to 20% of 2024 volumes, with a 50% tariff applied above that threshold. FTA partners (excluding the U.S. and Mexico) will be subject to TRQs at 75% of 2024 levels, with the same over-quota tariff.

• A 25% tariff will apply to imports containing steel melted and poured and aluminum smelted and cast in China. Canada is also reviewing its remission framework and trade arrangements to strengthen the competitiveness of domestic producers.

• Additionally, a new 25% tariff on targeted imported steel-derivative products such as wind towers, prefabricated buildings, fasteners, and wires.

• A new reskilling package for up to 50,000 workers, more flexibility and extended benefits in the Employment Insurances, and a new digital jobs and training platform to connect Canadians workers more quickly to careers.

• Earmarking more than $100 million over two years to provide support to eligible employers in sectors with an active Work-Sharing agreement and commit to supporting training for employees working reduced hours, helping up to 26,000 Canadian workers in various sectors, including steel.

• $150 million of the Regional Tariff Response Initiative (RTRI) carved out for steel producers.

• Enhanced financing tools, including changes to the Large Enterprise Tariff Loan (LETL), expanded support through the Bank of Canadian Entrepreneurs’ (BDC) Pivot to Grow, and Regional Development Agencies (RDAs).

• Prioritizing the use of Canadian steel and aluminum in publicly funded projects through the new Buy Canadian procurement policy, requiring all contracts worth over $25 million to prioritise Canadian materials.

• Working with railway companies to cut freight rates for transporting Canadian steel and lumber interprovincially by 50 percent, beginning in Spring 2026.