Canada weighs stronger trade retaliation as U.S. steel and aluminum imports face 50% tariffs, industry braces for impact
OTTAWA: Canada may impose higher counter-tariffs on U.S. steel and aluminum imports if negotiations with the Trump administration fail to yield a broader trade deal within the next 30 days, Prime Minister Mark Carney said Thursday.
The warning comes after U.S. President Donald Trump more than doubled tariffs on foreign steel and aluminum earlier this month, raising duties from 25% to 50%—a move that threatens Canada, the largest supplier of both metals to the U.S. market. Industry leaders have pressed Ottawa for a strong response, fearing economic fallout from the abrupt policy shift.
Carney, who met with Trump earlier this week, said the two leaders agreed to fast-track talks on a new economic and security pact before a July 21 deadline.
“Canada will adjust its existing counter-tariffs on U.S. steel and aluminum products on July 21 to levels consistent with progress made in the broader trading agreement,” Carney told reporters. He stopped short of immediately matching Trump’s hike, opting instead to use the 30-day window to push for a negotiated solution.
Retaliatory Measures and Domestic Safeguards
Canada first imposed retaliatory tariffs in March, targeting $12.6 billion (CAD) in U.S. steel and $3 billion (CAD) in aluminum. The new measures announced Thursday include stricter federal procurement rules, favoring Canadian producers and trade partners with tariff-free access.
To shield domestic markets from foreign dumping, Ottawa will also impose tariff-rate quotas on steel imports from non-free-trade partners, capping volumes at 100% of 2024 levels.
The stakes are high: More than 90% of Canada’s steel and aluminum exports go to the U.S., while Canada absorbs 20% of U.S. steel exports and half of its aluminum shipments, according to the Royal Bank of Canada.
Infrastructure Push and Industry Support
The Carney government has prioritized infrastructure projects—from defense to pipelines and housing—that will require massive steel and aluminum supplies. “We are united in working on all forms of support for the industry, starting with buying Canadian steel and aluminum for federal projects,” Carney said.
A new task force will monitor market impacts under the tariff regime, while incentives will push manufacturers to use domestically sourced metals.
U.S. Tariff Changes Complicate Trade Calculus
Trump’s June 3 executive order not only raised tariffs but also altered how they are applied. The revised “stacking” rules ensure steel and aluminum imports face the 50% duty instead of lower border-security tariffs. However, auto parts—which could face either a 25% auto tariff or the 50% aluminum levy—present a dilemma for exporters.
Canadian businesses must now weigh whether to leverage the Canada-U.S.-Mexico Agreement (CUSMA) for exemptions or accept lower tariffs on entire shipments. For example, an aluminum auto part eligible for CUSMA could dodge the 25% auto tariff but still get hit with the 50% metal duty—forcing firms to assess which option minimizes costs.
What’s Next?
With no formal Canadian response yet to the 50% U.S. tariffs, industry analysts warn of prolonged uncertainty. If talks collapse by July 21, Ottawa’s retaliatory measures could further strain one of the world’s most integrated trading relationships.
For now, Carney’s strategy hinges on negotiation—but the clock is ticking.