Abstract
In the face of global trade challenges and economic uncertainties, the Canadian government has announced that it plans to take decisive steps to protect its steel and aluminium industries. These measures are designed to safeguard Canadian workers, ensure the stability of these critical sectors, and maintain the country's economic resilience. This article explores the various measures implemented by the government and their significance.
Introduction
On June 4, 2025, the United States of America ("U.S.") increased tariffs on Canadian steel and aluminium imports to 50%, significantly impacting these sectors. This move comes amid broader geopolitical tensions and ongoing negotiations for a new economic and security partnership between Canada and the U.S. Canada has recently announced a series of measures to protect its steel and aluminium industries were announced in response to escalating tariffs imposed by the US. The motive behind such sweeping measures is reportedly to stabilize its domestic market and safeguard its industries and workers against the increased trade barriers
Measures announced
The Canadian government has introduced a comprehensive set of measures to address the challenges faced by the steel and aluminium industries. One of the primary actions is the adjustment of counter-tariffs on U.S. steel and aluminium imports. Effective 21st July 2025, these counter-tariffs will be revised to reflect ongoing trade negotiations with the United States of America (USA). This approach aims to maintain pressure on the U.S. while rewarding constructive progress in trade discussions.
Canada also plans to implement reciprocal procurement policies, from 30th June 2025. These policies aim to limit access to federal procurement contracts to Canadian suppliers and suppliers from countries offering reciprocal access to Canadian entities, under various trade agreements. This move is intended to further bolster the use of Canadian steel and aluminium in government-funded projects, thereby supporting domestic production and employment. The move supplements the objective of the government to prioritize funding of projects that use predominantly Canadian steel and aluminium.
To stabilize the domestic market, Canada plans to impose new tariff rate quotas (TRQs) on imports of steel products from partners not connected through trade agreements. These TRQs, have been set at 100% of 2024 imports quantities, and aim to prevent injurious trade diversion and support Canadian producers. The quotas will be applied retroactively and reviewed after 30 days to ensure their effectiveness.
In addition to the above, Canada has introduced targeted tariffs based on the origin of production. For steel, tariffs are expected to be applied based on the "country of melt and pour", that is the location where raw steel is first produced in a steel-making furnace in a liquid state and then poured into its first solid shape. For aluminium, tariffs are expected to be applied based on the "country of smelt and cast", that is the country where the aluminium metal is produced from alumina (or aluminium oxide) by the electrolytic process and last liquified by heat and cast into a solid state. These tariffs have been designed to combat global overcapacity and unfair trade practices, particularly from jurisdictions not aligned with Canada's trade standards.
Further, Canada has announced plans to establish two government-stakeholder task forces, for steel and aluminium to monitor market trends and provide insights for future decisions. These task forces will be composed of industry stakeholders and government representatives showcase the collaborative approach taken to ensure the government bodies are well-informed and responsive to the evolving needs of the industries.
Lastly, the government has established a $10 billion program, the Large Enterprise Tariff Loan facility, aimed at supporting eligible large businesses facing difficulties due to U.S. trade actions. Such a loan facility has been set to provide access to liquidity which would help employers sustain operations and ensure financial resilience when the market stabilizes.
Potential the measures
The long-term effects of the systemic and substantive measures announced by Canada in order to protect the steel and aluminum industries, are profound. By implementing the counter-tariffs and reciprocal procurement policies, the government aims to stabilize the domestic market and support Canadian producers. The measures are designed to protect Canadian workers by preventing job losses due to unfair trade practices and market instability. By supporting domestic production and prioritizing Canadian materials in government projects, the government helps secure employment for thousands of workers in the labor-intensive industries. Most notably, while the measures include counter-tariffs, they have reportedly been used to encourage constructive trade negotiations with the United States of America and other trading partners. The introduction of tariff rate quotas and targeted tariffs based on the origin of production helps prevent harmful trade diversion and overcapacity. Canada has reported that these measures may be modified as needed in under the backdrop of the pending developments with U.S. tariffs.
Conclusion
The Canadian government's measures to protect the steel and aluminium industries underscore its commitment to safeguarding national economic interests and supporting domestic workers. By addressing trade challenges, implementing reciprocal procurement policies, and introducing targeted tariffs, the government aims to ensure the long-term viability and resilience of these critical sectors. These actions would not only protect jobs and ensure economic stability but also aim to reinforce Canada's position in the global market. As the government continues to monitor and respond to market dynamics, these measures will play a crucial role in maintaining the strength and competitiveness of Canada's steel and aluminium industries.
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