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Canada is taking further action to protect its steel and lumber industries, including reducing the tariff rate quotas (TRQ) for steel imports, implementing a new global 25 per cent tariff on certain steel derivative products, and introducing new measures to encourage domestic consumption of steel and lumber.
These measures, first announced by Prime Minister Carney on November 26, 2025, will have major implications for importers of steel products and supply chains using steel, as well as Canadian domestic producers of steel, lumber, and steel derivative products.
We discuss these new measures and their implications below.
Background
Canada's steel and lumber industries have been among the most impacted by the change in US trade policy and the imposition of tariffs by the US. In addition to losing a critical export market that has historically accounted for over 90 per cent of their exports, Canadian steel and lumber producers have also faced rising competition from foreign producers selling into the Canadian market.
In order to protect Canadian industry, particularly the steel industry, Canada previously introduced several measures including:
- A TRQ on imports of steel mill products, which placed limits on the amount of certain steel products that could be imported at a low or zero duty rate, with importation above that threshold subject to 50 per cent surtax.
- 25 per cent surtax on many Chinese steel products.
- 25 per cent surtax on many US steel products.
Canada also previously announced a number of supports for Canadian industry, including loan guarantees, to address the immediate pressures facing the softwood lumber sector, funding for trade-affected firms pivoting their operations, and new funding to drive export market diversification.
New Measures Targeting Steel Imports
New measures to further protect the Canadian steel industry include:
- Further restricting the steel TRQ's beginning December 26,
2025, by:
- Reducing the TRQ levels for steel imports from non-free trade agreement partners from 50 to 20 per cent of 2024 levels, with over-quota volumes being subject to a 50 per cent surtax.
- Reducing TRQ levels for steel imports from free trade agreement partners from 100 to 75 per cent of 2024 levels, with over-quota volumes facing a 50 per cent surtax. These restrictions do not apply to imports from Mexico and the US.
- Imposing a global 25 per cent surtax on imported steel derivative products such as wind towers, prefabricated buildings, fasteners, and wires beginning December 26, 2025.
- Eliminating the temporary surtax remission on steel imported from the US for use in manufacturing, packaging, and agriculture as of January 31, 2026; and
- Creating a new steel compliance team within the Canada Border Services Agency, focused exclusively on enforcement activities.
Measures to Foster Domestic Demand for Canadian Steel and Lumber
Canada has also announced measures that are likely to increase demand for Canadian steel and lumber products, building upon previous commitments in this area.
Key measures include:
- New funding for Canadian railways to enable a 50 per cent freight rate discount on interprovincial steel and lumber shipments beginning Spring 2026.
- Prioritizing projects using Canadian wood through Build Canada Homes, a new federal agency.
- A Buy Canadian Policy that will require the use of Canadian steel and lumber in federal contracts valued over $25 million.
Key Takeaways
Importers should carefully review these developments to assess potential surtax liability, while businesses relying on steel and lumber inputs in their supply chains should similarly consider the potential impacts of these changes on their operations. Canadian steel and lumber producers should also carefully monitor these developments to see how they may benefit from the latest efforts to bolster and transform domestic production.
The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.
