Canada and Ontario announce industry support to counter 50% U.S. steel tariffs
Key Facts
Canada's federal government and the Ontario government announced a joint plan to support the steel, automotive and critical minerals sectors amid pressure from U.S. tariffs. According to Innovation, Science and Economic Development Canada, the plan includes measures to protect industry and workers and boost demand for domestic steel. The United States raised tariffs on steel imports from 25% to 50% in June 2025, prompting Canadian producers to focus on the domestic market and diversify their export destinations, according to Reuters. Canadian steel shipments to the United States fell 60% in 2025, according to the Canadian Steel Producers Association, cited by Reuters. Meanwhile, Reuters cited the United Steelworkers union as saying domestic production's share of steel used in Canada rose to 51% in 2025 from 41% in 2024.
Canadian and Ontario procurement policies prioritize domestic steel in public purchasing, according to the statement from the innovation ministry, to boost domestic demand for Canadian mills' output. Alongside the procurement measures, the Canada Border Services Agency is stepping up oversight of steel trade to protect the industry from unfair trade practices. The ministry described the border measures as including "targeted enforcement activities" as part of efforts to protect the sector. A joint steel task force will advise both governments on implementing support earmarked for the industry. Its mandate also includes reducing transportation costs and improving the sector's competitiveness, alongside monitoring government support instruments.
In the automotive sector, the government's previous strategy allocated up to 3 billion Canadian dollars from the Strategic Response Fund to support investment in manufacturing, assembly and components. The strategy also included up to 100 million Canadian dollars from the Regional Tariff Response Initiative, according to the innovation ministry. Under that strategy, the government committed to retaining counter-tariffs on vehicles imported from the United States for as long as necessary to protect industry and workers. Under the existing remission framework, manufacturers in Canada can import a specified number of U.S. vehicles without paying counter-tariffs. The exemption is tied to maintaining expected production levels in Canada, making continued domestic production a condition for benefiting from tariff relief.
The federal government previously announced terms for 400 million Canadian dollars in financing for Algoma Steel, according to the finance ministry. The financing aimed to help the company maintain operations amid trade pressures facing the steel sector. The stated objective also included reducing Algoma's dependence on the U.S. market. The Ontario government added 100 million Canadian dollars in financing on the same terms as the federal funding. Finance Minister François-Philippe Champagne said the support helps the company "adapt its operations, remain competitive and, most importantly, protect jobs."
At the company level, Cleveland-Cliffs, which owns Stelco, said in its latest earnings release that Canada's hot-rolled steel market had "improved materially." It added that the improvement had made Stelco a positive contributor to earnings before interest, taxes, depreciation and amortization. In the same release, however, it announced the indefinite idling of Stelco's galvanizing lines, citing oversupply in the Canadian market. The company said workers affected by the shutdown would return when conditions improve. It said Stelco's focus on hot-rolled products would maintain overall production volumes and about 2000 Canadian jobs.
Against the economic backdrop, Canada's annual inflation rate reached 3.1% in September, up from 3% in August, according to Reuters. The reading was below the 3.2% forecast in the agency's poll. On implementation of the industrial plan, the governments will establish a coordinated process for federal and provincial permitting, according to the innovation ministry. The process aims to accelerate projects and reduce duplication between the two levels of government. The government's next fiscal milestone comes on November 5, 2026, when Finance Minister François-Philippe Champagne presents the 2026 budget, according to the date announced by Canada's finance ministry.