Ottawa to curb steel imports with tariff rate quota on certain countries

The federal Department of Finance says it will limit the amount of foreign steel coming into the country by placing a tariff on imports that exceed a certain threshold from countries that do not have a free trade agreement with Canada.

The policy, known as a “tariff rate quota,” announced on Friday allows non-free trade countries to send the same volume of steel to Canada that they sent in recent years, but applies a 50 per cent tariff if they exceed a designated threshold in any single quarter.

The United States in June raised tariffs on foreign steel from 25 per cent to 50 per cent. The result has effectively closed the U.S. as a long-term market to many of Canada’s largest steel producers, as well as those in other countries.

Now, steel companies say they are trying to grow their domestic sales at the same time as steel producers around the globe eye the Canadian market as a way to offset lost sales in the U.S. As a result, lobbyists have been pressing the Liberal government to protect the industry.

“The industry had asked repeatedly for significantly lower import levels on unfair traders to regain market share at home,” Catherine Cobden, chief executive of the Canadian Steel Producers Association (CSPA), which represents the 17 largest domestic steel companies, said in a release on Thursday. “We believe it is long overdue.”

But the CSPA has been clear that its members would like the federal government to enact policies that go further. Earlier this month, its board members travelled to Ottawa for a meeting with some key ministers.

Michael Garcia, chief executive of Sault Ste. Marie, Ont.-based Algoma Steel Group Inc., said he asked the government for a tariff rate quota that would apply a 20 per cent tariff on steel from all countries, including those that have free trade agreements with Canada.

“That would be something that would have a meaningful impact on the health of the Canadian steel sector,” he said.

Historically, Algoma has said it sells 50 per cent to 60 per cent of its products, measured by volume, into the U.S. Now, that level has fallen below 50 per cent and is still shrinking as the fallout from the U.S.’s 50 per cent tariffs continues.

Canada imported 8.3 million tonnes of steel in 2024, a 5.5 per cent decline from 2023, according to the U.S. International Trade Monitor. Canada also exported about 6.4 million tonnes of steel, mainly to the U.S., where it is the largest source of foreign steel.

A spokesperson for the Finance Ministry said that non-free trade agreement countries sent 2.6 million tonnes to Canada in 2024.