Canada, Ontario announce C$8.7 billion in investment to support industries hit by U.S. tariffs
Key Facts
The Canadian and Ontario governments announced an investment package worth C$8.7 billion to support strategic industries, workers and businesses affected by U.S. tariffs, according to a statement from Innovation, Science and Economic Development Canada. The package includes the Joint Action Fund for Steel, to which the federal government is committing C$3.55 billion over five years. Ontario is contributing C$1.67 billion to the fund over the same period to finance production and market diversification and strengthen domestic supply chains. In critical minerals, the plan includes a federal commitment of up to C$1 billion over three years to develop essential roads supporting the sector's development in northern Ontario's Ring of Fire region. The funding places the region's infrastructure within the support for strategic industries announced by the two governments. Ontario Premier Doug Ford said alongside the package's announcement that "it is clear that Canada's relationship with the United States has changed permanently," according to the Associated Press.
In the auto industry, the two governments are allocating an additional C$2.5 billion over two years for major capital projects, according to the innovation ministry. The funding aims to modernize production and support the transition to connected and electric vehicles, alongside temporary flexibility in emissions standards for manufacturers facing trade pressures. Average fleet emissions standards for light-duty vehicles will be held at the 2026 level of 172 grams per mile through 2029. The funding follows the announcement of an automotive strategy in February that allocated up to C$3 billion from the Strategic Response Fund to support vehicle and parts manufacturing. The strategy also allocated up to C$100 million from the Regional Tariff Response Initiative to the same sector. The support comes amid the industry's heavy dependence on the U.S. market, with the finance ministry's Spring Economic Update showing that more than 90% of vehicles made in Canada are exported to the United States. The United States also takes 60% of domestically manufactured auto parts, highlighting Canadian production's exposure to the trade dispute.
Support for the steel sector comes after domestically produced steel's share of Canadian steel use rose to 51% in 2025 from 41% in 2024, according to United Steelworkers calculations cited by Reuters. An Organisation for Economic Co-operation and Development report estimated Canadian steel demand grew by about 2.7% in 2025 and forecast growth would slow to about 0.9% in 2026, according to the news agency. At the company level, Cleveland-Cliffs said in its quarterly earnings disclosure that an improving Canadian hot-rolled steel market made Stelco a positive contributor to earnings before interest, taxes, depreciation and amortization in the third quarter. But the company decided to idle Stelco's galvanizing lines indefinitely, citing oversupply in Canada's galvanized steel market. It said focusing on hot-rolled products would preserve Stelco's overall production volume and about 2,000 Canadian jobs.
On trade protection, a finance ministry announcement in June set steel import quota levels based on import volumes in 2024. Quotas for partners without a free trade agreement with Canada were set at 20% of those reference volumes. For partners with a free trade agreement in force, the announcement set quotas at 75% of volumes in the same reference period. Steel imports exceeding the applicable quotas are subject to a 50% tariff, according to the ministry. The extension of the quota system has taken effect, with regulations published by the justice ministry including a quarterly period beginning on March 30, 2027 and ending on June 27, 2027. Before then, the government's next fiscal milestone falls on November 5, 2026, when Finance and National Revenue Minister François-Philippe Champagne will present the 2026 budget, according to the date announced by the finance ministry.