Tariffs Imposed on Canadian Steel & Aluminum (2025)

 "Discover key facts about the 2025 U.S. tariffs on Canadian steel and aluminum, their economic impactand Canada's response. Stay informed on trade policies and industry effects."

Background and Timeline:

On February 10 and 11, 2025, U.S. President Donald Trump signed executive orders imposing a 25% tariff on steel and aluminum imports from Canada and other countries, effective March 12, 2025, under Section 232 of the Trade Expansion Act of 1962, citing national security concerns.

On June 3, 2025, an additional executive order raised the tariffs on Canadian steel and aluminum to 50%, effective June 4, 2025, combining the initial 25% tariff with another 25% under the International Emergency Economic Powers Act (IEEPA).

Scope and Impact:

The tariffs cover both finished and derivative steel and aluminum products from Canada. The U.S. and Canadian steel and aluminum industries are deeply integrated, with Canada exporting $15.9 billion in aluminum and $20 billion in steel to the U.S. in 2024, making it the largest supplier to American industries.

 These tariffs are expected to increase costs for Canadian exporters and U.S. manufacturers, disrupt supply chains in sectors like automotive and construction, and reduce profit margins on both sides of the border.

Canadian producers are advised to explore alternative markets and adjust supply chains to mitigate the impact.

Canadian Response:

In retaliation, Canada imposed a 25% duty on U.S. steel, aluminum, and other goods, effective March 13, 2025, targeting $12.6 billion in U.S. steel, $3 billion in aluminum, and $14.2 billion in other goods, totaling $29.8 billion.

Canada’s countermeasures are dollar-for-dollar and will remain in place until the U.S. tariffs are lifted.

Further retaliatory measures are possible if additional U.S. tariffs are introduced. Canada also plans a second wave of tariffs valued at $125 billion, targeting U.S. passenger vehicles, trucks, electric vehicles, steel, aluminum, fruits, vegetables, aerospace products, beef, pork, dairy, recreational vehicles, and boats.

Non-Tariff Measures:

Also, Canada is considering non-tariff retaliatory measures, such as restricting exports of critical minerals and energy to the U.S., limiting U.S. companies’ access to Canadian government procurement contracts, and potentially suspending certain rights under the United States–Mexico–Canada Agreement (USMCA).

These measures aim to pressure the U.S. to remove its tariffs while minimizing harm to Canadian industries.

Global Steel Market and Trade Diversion:

The global steel market faces overcapacity, with low-priced, often "dumped" steel from countries like China depressing prices in Canada and threatening its domestic steel industry.

U.S. tariffs increase the risk of trade diversion, where steel originally intended for the U.S. is redirected to Canada, further flooding its market.

To counter this, Canada imposed a 25% surtax on Chinese steel and aluminum effective October 22, 2024, and launched public consultations in March 2025 to explore additional trade measures to prevent steel diversion.

 Historical Context and Key Takeaways:

Similar U.S. tariffs were imposed in 2018 but were lifted for Canada in May 2019. The 2025 tariffs mark a significant escalation in U.S.-Canada trade tensions, impacting integrated supply chains and intermediate goods.

Both nations are negotiating, but as of June 15, 2025, the tariffs remain in effect.

In the meantime, Canada is supporting its industries through tariff revenue and other measures. The situation remains dynamic, with potential for further escalation depending on bilateral talks and broader trade policies.

 

SP

 “For information purposes only”

 

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