Ottawa announces support measures for Canadian steel

Key Takeaways:

• Canada is tightening steel import rules by expanding tariff rate quotas and imposing a 25% surtax on steel products containing Chinese steel, aiming to protect the domestic market from cheap foreign imports and trade circumvention.
• The federal government is investing over $1.5 billion through various programs—including the Strategic Innovation Fund, worker retraining, and small business financing—to help modernize the industry, support job retention, and boost competitiveness.
• Federal procurement rules will now require contractors to use Canadian-made steel whenever possible, reinforcing demand for domestic production and discouraging reliance on foreign suppliers.

The Whole Story:

The federal government is rolling out a sweeping package of trade measures and financial supports aimed at protecting Canada’s steel industry from foreign competition, surging imports, and U.S. tariffs.

With more than half of Canada’s steel exports heading to the U.S. and growing volumes of low-cost foreign steel threatening to flood domestic markets, the federal government says it’s acting to ensure the long-term strength of a sector it describes as vital to infrastructure, manufacturing and the clean economy.

Tariff measures to curb steel dumping

Starting August 1, Canada will expand its use of tariff rate quotas (TRQs)—which allow a set amount of steel imports at a lower tariff—to include countries with free trade agreements, excluding the U.S. and Mexico. Any imports above 2024 levels from these countries will face a 50 per cent surtax. Countries without a trade agreement with Canada will see their duty-free quotas halved, with the same surtax applied to volumes above that threshold.

In addition, a 25 per cent surtax will be imposed on steel imports from all countries (except the U.S.) that contain steel melted and poured in China, aimed at preventing trade circumvention and increasing transparency.

Billions in funding for innovation and stability

The federal government will invest up to $1 billion through the Strategic Innovation Fund to help steel companies modernize operations, pivot to new products, and strengthen domestic supply chains. The support is intended to boost competitiveness in defence and strategic sectors, and to encourage the development of steel products not currently made in Canada.

Another $70 million will be allocated through Labour Market Development Agreements over three years to retrain and reskill up to 10,000 steelworkers, with programs tailored in partnership with provinces, employers, and unions.

Support for businesses large and small

For small and medium-sized steel firms, the government is launching the Pivot to Grow fund, a $500 million program through the Business Development Bank of Canada offering flexible financing to help companies explore new markets and improve productivity.

Larger firms will benefit from changes to the Large Enterprise Tariff Loan Facility, originally announced in March. The $10 billion facility’s lending terms will be eased, including lower interest rates and smaller loan minimums, to make it more accessible to steel producers.

Additionally, up to $150 million of a previously announced $450 million Regional Tariff Response Initiative will be earmarked for steel sector SMEs impacted by tariffs.

Canadian content in procurement

The government also announced that federal contractors will be required to use Canadian-made steel wherever possible. Exceptions will only be granted in writing if the needed product is unavailable domestically or would significantly raise costs or cause unacceptable delays.

“Canada needs steel to build homes, transit, bridges—and the clean economy of tomorrow,” the Department of Finance said in a statement. “These measures will help ensure our industry is ready to meet that demand.”