Canada Strengthens Steel Import Tariff Quotas to Protect Domestic Industry

Canada’s Steel Import Tariff Quota System Faces Major Overhaul

Canada has announced significant changes to its steel import tariff quota system to shield its domestic steel industry from escalating U.S. trade barriers. These changes, revealed on the Canadian government’s website, aim to reduce dependency on steel imports and increase transparency in domestic supply chains. This strategic move reflects growing concern over the vulnerability of Canada’s export-driven steel sector.

In 2024, Canadian producers exported over 50% of their steel output, with 90% destined for the U.S. However, persistent U.S. tariffs have exposed Canadian producers to mounting trade risks. In response, Canada will reduce duty-free steel import volumes and impose new tariffs on excess imports. These new regulations take effect on 1 August 2025.

Under the revised policy, countries with free trade agreements (excluding the U.S. and Mexico) can only export steel to Canada duty-free up to 2024 volumes. Any excess will face a 50% tariff. Non-FTA countries will see their duty-free quota slashed to 50% of 2024 levels, with the same tariff applied on surplus imports.

New Steel Tariffs Include Surtax on Chinese-Origin Material

To further safeguard domestic production, Canada will implement a 25% surtax on any steel imports—except from the U.S.—that include material smelted and cast in China. This measure aligns with the current China Surtax Order, aiming to deter circumvention of existing trade protections. The surtax will come into effect before the end of July.

Additionally, the government will consult with industry leaders to finalize the new tariff quota system. Another key initiative includes revising federal procurement rules: contractors working with the government must prioritize steel sourced from Canadian producers. This policy shift is designed to create a stronger, more resilient supply chain.

To bolster long-term industry growth, Canada will allocate up to $1 billion through the Strategic Innovation Fund. This funding will support the steel sector’s transition into new business areas and modernize domestic production capabilities.

SuperMetalPrice Commentary:

Canada’s proactive stance on steel import tariff quotas sends a clear message to global markets: the country is committed to insulating its core industries from external shocks. While these changes may tighten global access to the Canadian market, they simultaneously foster growth and innovation within Canada’s domestic steel sector. The 25% surtax targeting Chinese-origin steel may also reshape global sourcing strategies, pushing importers to seek more transparent supply chains. Investors and producers should closely watch how these measures influence North American steel prices in the coming quarters.