In a significant move aimed at bolstering its steel and lumber sectors, Canada has announced a new strategy to enhance domestic production while countering the impact of U.S. tariffs. Prime Minister Mark Carney’s recent address outlines measures that not only address current economic vulnerabilities but also seek to reshape the future of Canada’s industrial landscape by fostering a more independent trade framework. This pivot, which comes amidst stalled negotiations with the United States, underscores Canada’s commitment to its workforce and resource sectors as it navigates challenging geopolitical waters.
Canada is taking decisive steps to support its steel and lumber industries, which have been adversely affected by U.S. tariffs. Prime Minister Mark Carney unveiled a new plan aimed at strengthening the domestic market and providing aid to affected workers during a news conference on Wednesday.
One of the key components of the plan involves reducing the quota for steel imports from countries that do not have a free trade agreement (FTA) with Canada, decreasing it to 20 percent from 50 percent of the 2024 levels. For countries with an FTA, including Canada’s existing agreements, the quota will be adjusted from 100 percent to 75 percent of the same benchmark. Notably, this policy change will not apply to the United States and Mexico, given their obligations under the United States-Canada-Mexico Agreement (USMCA).
Additionally, Canada plans to impose a global 25 percent tariff on selected imported steel-derivative products and introduce border measures designed to combat practices such as steel dumping, which threatens local industries. This initiative builds upon a previous quota set in July, which sought to limit imports from non-FTA countries to curb the influx of foreign steel.
The steel industry plays a critical role in Canada’s economy, contributing more than CAD 4 billion (approximately USD 2.8 billion) to the country’s gross domestic product (GDP) and providing direct employment to over 23,000 individuals. However, the sector has faced significant challenges, particularly in light of former U.S. President Donald Trump’s imposition of a 50 percent tariff on steel imports, alongside a 45 percent tax on softwood lumber.
Carney emphasized that the longstanding trend toward deeper economic ties between Canada and the U.S. has shifted, acknowledging that while Canada has traditionally relied on the United States as its primary export market—making up more than 75 percent of exports—this dependency has exposed vulnerabilities within the Canadian economy.
In response, the Canadian government will collaborate with railway companies to reduce freight rates for inter-provincial transportation of steel and lumber by 50 percent, starting in early 2026. This initiative is expected to lower transportation costs and promote the use of domestically produced materials for homebuilding projects and other ventures.
The prime minister’s announcement coincides with escalating tensions in U.S.-Canada trade relations, highlighted by Trump’s recent decision to suspend trade negotiations after the Ontario provincial government aired advertisements in the U.S. that criticized his tariff policies, referencing a speech by former U.S. President Ronald Reagan. Carney is set to meet with Trump in Washington on December 5 during the FIFA World Cup 2026 draw and expressed readiness to re-engage in trade talks as soon as the U.S. is willing.
As Canadian businesses grapple with the financial repercussions of current tariffs, industry leaders, such as Deere & Co., have indicated that they expect increasing costs moving forward, with a projected pre-tax tariff impact of approximately CAD 1.2 billion (around USD 900 million) for the fiscal year 2026.
This strategic overhaul illustrates Canada’s commitment to not only safeguarding its key industries but also redefining its trade relationships in an increasingly complex global economy.
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