AsianFin -- Canada announced new tariffs and trade restrictions Wednesday to shield its steel and lumber industries from U.S. duties, marking Prime Minister Mark Carney's first expansion of import taxes on American products since dropping most retaliatory measures in September. The move comes as trade talks with Washington remain frozen and Canadian producers face mounting pressure from both Trump administration tariffs and what Ottawa describes as Chinese steel dumping.
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The government will impose a 25% tariff on roughly C$10 billion ($7.1 billion) of imported steel derivative products including wind towers, prefabricated buildings, fasteners and wires, with about 40% of affected items typically sourced from the U.S. The levy takes effect December 26 and adds to an existing 25% tariff on U.S. steel and aluminum that Canada maintained despite dropping other retaliatory measures.
Carney also announced C$1 billion in support for the lumber industry and tightened quotas on steel imports from non-free trade agreement countries, cutting the threshold to 20% of 2024 levels from 50%. The measures aim to create domestic market space for Canadian producers squeezed by Trump's 50% tariffs on steel and 45% duties on softwood lumber.
The prime minister said the actions were not aimed at pressuring Washington but reflected a "global approach" to protecting Canadian industry. Trade negotiations with the U.S. have been suspended since October 23, when Trump abruptly ended talks after objecting to an Ontario government anti-tariff advertisement.
Protecting Domestic Steel Market
Canada's steel industry contributes more than C$4 billion to GDP and employs over 23,000 workers directly. The sector has been hit particularly hard by Trump's tariffs, which effectively closed off a market that previously absorbed 90% of Canadian steel exports. Producers now face the dual threat of lost U.S. sales and an influx of foreign steel seeking alternative markets.
The new 25% tariff on steel derivative products targets items that escaped previous duties. For countries with free trade agreements, Canada will lower import quotas to 75% of 2024 levels from 100%, though this excludes the U.S. and Mexico under the United States-Canada-Mexico (USMCA) free trade deal. The government will also establish a dedicated steel compliance team at the Canada Border Services Agency to combat dumping and detect false declarations.
Carney said the government will end temporary tariff remission on January 31 for steel used in manufacturing, food packaging and agricultural production, giving companies a final deadline to secure exemptions. The measures are expected to unlock over C$1 billion in new domestic demand for Canadian steel.
Lumber Industry Support
The lumber sector received C$1 billion in aid,split between C$500 million for the Business Development Bank of Canada's Softwood Lumber Guarantee Program and C$500 million earmarked under the Large Enterprise Tariff Loan facility. The government will also prioritize shovel--ready homebuilding project using Canadian wood products through its Build Canada Homes agancy, creating estimated C$70 million to C$140 million in new demand.
To reduce transportation costs, Ottawa will work with Canadian National Railway Co. and Canadian Pacific Kansas City Ltd. to offer a 50% discount on interprovincial shipments of steel and lumber starting in spring 2026. The government also earmarked more than C$100 million over two years to support up to 26,000 workers in various sectors through enhanced work-sharing agreements.
Carney pledged to implement a Buy Canada policy later this year requiring all federal defense and construction contracts exceeding C$25 million to prioritize Canadian materials including steel and lumber. The policy will extend across federal grants and contribution programs.
Trade Tensions Persist
Carney confirmed he will travel to Washington on December 5 for the 2026 World Cup draw, where he expects to see Trump for the first time in about a month. The prime minister disclosed he spoke with Trump on Tuesday but described the exchange as "not newsworthy." Canada remains "ready to re-engage" on trade talks when the U.S. chooses to resume negotiations.
The prime minister acknowledged that decades of deepening economic integration with the U.S. have ended. "Many of our strengths have become vulnerabilities," Carney said, noting that more than 75% of Canadian exports went to the U.S. last year. The government is now focused on building a "more self-sufficient" economy less reliant on a single trade partner.
Keanin Loomis, head of the Canadian Institute of Steel Construction, called the measures "an encouraging leap forwards," adding that the industry has advocated for such protection for months. "The Prime Minister has a much firmer grasp on this file than he did a few months ago," Loomis said.
