The world is changing rapidly. The United States, the world’s largest economy, is fundamentally reshaping all its trade relationships, causing major disruption and upheaval for Canadians. It is time to transform our economy from one that is reliant on a single trade partner to one that is stronger, more self-sufficient, and resilient to global shocks. That means working with urgency and determination to transform our strategic industries – including steel and lumber – so they can adapt, compete, and win in this new global environment.
STEEL
Steel is an essential building block to Canada’s economic future – supporting about 23,000 direct jobs and a large share of the 172,000 jobs in fabricated metals. Canada’s steel sector supports nation-building infrastructure projects, transportation, manufacturing, housing, and emerging sectors, such as AI data centres. A strong steel sector is also key to national security, as it is an input into defence products and critical energy infrastructure.
Global steel markets are under pressure from excess capacity driven by non-market practices abroad, resulting in artificially low-priced imports that undermine Canadian producers. Recent U.S. trade actions have further disrupted market dynamics, closing off Canada’s primary export destination and intensifying competition at home.
Canada is a net importer of steel, and Canadian primary steel producers, who have traditionally exported over half their output – of which over 90% goes to the U.S. – have seen exports fall 24% year over year, reducing revenues and demand. Since tariffs were imposed, employment in the steel sector has dropped, with roughly 1,000 jobs lost to date.
In response, Canadian producers can pivot – at least in part – to the domestic market. However, to compete and win in this new market, workers and businesses need time to pivot. Canada has historically maintained one of the most open steel markets, with imports supplying nearly two-thirds of domestic consumption.
Estimate of Canadian Steel Mill Product Market
Figure: The flowchart represents an estimate of the Canadian steel mill product market for 2024. Domestic production totals 12.0 million metric tonnes. This production is divided into: 6.1 million metric tonnes of exports to the U.S., 0.4 million metric tonnes of exports to the rest of the world, and 5.5 million metric tonnes of domestic sales within Canada. The Canadian market totals 13.8 million metric tonnes and consists of: 5.5 million metric tonnes of domestic sales, 3.3 million metric tonnes of imports from the U.S., and 5.0 million metric tonnes of imports from elsewhere.
Downstream Canadian firms are also affected by U.S. tariffs on steel derivatives, leading to job losses and heightened risk for high-skilled employment.
Support to date
To safeguard the sector, Canada’s new government announced measures in July and September 2025, including tariff rate quotas, country of melt and pour tariffs, worker supports, liquidity assistance, $150 million of the Regional Tariff Response Initiative, $1 billion of the Strategic Response Fund (SRF), and a Buy Canadian Policy. Further actions are now needed to help firms pivot to domestic markets and secure long-term competitiveness of this strategic sector.
New measures to support Canada’s steel industry
Building on previously announced measures to help transform the Canadian steel industry, the following new initiatives were announced today.
Canada’s new government will:
Further limit foreign steel imports to ensure that Canadian steel producers have better access to the domestic market.
Tariff rate quotas allow a certain amount of steel to come into Canada tariff-free. After that limit is reached, tariffs apply.
Existing tariff rate quotas – that is, the volume of steel permitted to be imported tariff-free – will be reduced. This measure will prevent the Canadian market from being overwhelmed with cheap steel owing to global overcapacity and the closure of the U.S. market. It will also allow Canadian steel producers to compete fairly in the domestic marketplace.
Reduced tariff rate quotas include the following:
- Effective December 26, 2025, tariff rate quotas for countries that do not have a free trade agreement with Canada will be reduced from 50% to 20% of 2024 levels, with over-quota volumes continuing to face a 50% surtax.
- Effective December 26, 2025, tariff rate quotas for countries that have a free trade agreement in force with Canada will be reduced from 100% to 75% of 2024 levels, with over-quota volumes continuing to face a 50% surtax. Canada will continue to honour its existing CUSMA carve-out. As such, the United States and Mexico will continue to be exempted from this requirement.
- Effective December 26, 2025, Canada will apply a 25% tariff on the full value of listed steel derivative products from all countries. This measure will apply initially to a list of steel derivative products produced in Canada. This list may be periodically updated to reflect changes in market conditions. The initial, carefully selected list is expected to apply to over $10 billion in steel derivative imports. It will cover derivatives for which steel content is a large portion of the full value of the product, with the product categories shown below.
Steel Derivative Products Categories
- Certain shapes of iron/non-alloy steel
- Doors and windows
- Wire, ropes, cables, and chains
- Fasteners (e.g., nails, screws)
- Structures (e.g., prefabricated buildings, bridges, and wind towers)
- Steel and iron cloth, grille, and netting
- Seating with metal frame and certain metal furniture
A more comprehensive list will be made available.
Expire the temporary horizontal remission of counter-tariffs on U.S. goods
The horizontal remission of Canadian counter-tariffs on U.S. imports has been an important element of helping Canadian businesses manage the initial impact of those counter-tariffs. The Government of Canada’s temporary horizontal remission of counter-tariffs for goods used in Canada for manufacturing, processing, food and beverage packaging, or agricultural production is currently set to expire on December 15, 2025.
However, long-term horizontal remission is inconsistent with ensuring a competitive domestic marketplace for Canadian steel producers. To support a predictable transition away from the horizontal remission of Canadian counter-tariffs, the government will phase it out while allowing further time for Canadian operations to adjust their supply-chains.
The temporary horizontal remission of counter-tariffs on U.S. steel used for manufacturing, processing, food and beverage packaging, or agricultural production will expire effective January 31, 2026, with the continued exception of goods used for the manufacturing of automobiles, auto parts, and aerospace products. The horizontal remission of counter-tariffs on aluminum products will also continue beyond January 31, 2026.
Importers will still be eligible to apply for remission under the remission framework published by the government on March 4, 2025, which provides for ongoing tariff relief in a narrow set of circumstances, for example where inputs cannot be sourced domestically.
Toughen border measures to combat foreign steel dumping
Strong border enforcement is critical to prevent foreign steel dumping, including through mislabeling or mischaracterization, which threatens Canadian businesses and jobs. Effective enforcement requires up-to-date information, expertise, and resources. To meaningfully strengthen compliance and protect the integrity of Canada’s steel supply chain, the Government, through the Canada Border Services Agency (CBSA), is introducing new measures:
- The CBSA will make it easier to receive and act on tips related to non-compliance involving steel goods. This includes enhancements to the secure Border Watch online portal, making it easier for individuals and businesses to provide information related to mis-declared information or other suspected non-compliance. Expanding this channel will support earlier identification of risks and more targeted enforcement activities.
- The CBSA will work with the Canadian Steel Producers Association to establish recurring technical workshops that support effective enforcement. These sessions will focus on the technical characteristics of steel products, global supply-chain practices, and the information needed to support enforcement and compliance. Ongoing collaboration will help ensure CBSA officials remain informed about current industry practices and evolving global market conditions.
- The CBSA’s newly established Market Watch Unit will prioritise timely updates on steel market prices. The Market Watch Unit analyses trade flows and identifies products that may be at greater risk of being dumped into Canada. The Unit will now prioritize updating normal values for steel products to reflect current production costs, export prices, and global steel market conditions. This will help ensure that trade remedy duties collected on imports are accurate and consistent with evolving global dynamics.
- The CBSA will establish a dedicated steel trade compliance team focused exclusively on enforcement activities related to steel. This specialised team will conduct targeted reviews, compliance activities and focused enforcement in the steel sector.
Make it more affordable to transport Canadian steel and lumber across the country
In a time of economic uncertainty, our new government will build Canada strong by focusing on what we can control. That includes creating a more unified Canadian economy from east to west. Building big things across this country will require Canadian steel and lumber at a competitive price.
Beginning in Spring 2026, Canada’s new government provide funds to the Canadian National and Canadian Pacific Kansas City railways to enable a 50% freight rate discount on interprovincial steel and lumber shipments within Canada.
Buy Canadian Policy
Canada’s new government will implement a Buy Canadian Policy to prioritise Canadian materials in all contracts over $25 million. It will also apply to all Government of Canada Grants and Contributions programs, including federal infrastructure funding programs. The policy is focused on supply chains: while it does not require the contracted supplier to be Canadian, it does require Canadian steel, aluminum, and softwood lumber when the value exceeds $250,000.
Increase protections for Canadian steel workers
Many employers affected by U.S. tariffs worry about retaining skilled workers while reducing production to restructure and retool. Assisting these firms as they pivot to domestic and alternative export markets is key to building a resilient economy. To enable worker retention during this transition, the government is enhancing the Employment Insurance Work-Sharing Program across the Canadian economy – including in the steel sector.
Eligible EI Work-Sharing Program participants will receive an income top-up.
To make the program more attractive as an option for restructuring firms seeking to retain their skilled workforce, the government will provide grants to eligible employers, helping them increase the income replacement rate from 55% to 70% for affected workers. These grants will be available to employers in all sectors for firms who have active Work-Sharing agreements and commit to supporting training for employees while on Work-Sharing. Grants will enable employers to provide a relief grant for employees participating in training on the days they are not working and in receipt of EI support. Grants will be determined based on the average weekly earnings of the employer’s Work-Sharing employees. This measure will be implemented by January 2026.
SOFTWOOD LUMBER
Canada’s forest sector is the backbone of nearly 300 communities, providing over 194,000 direct jobs – including 11,000 for Indigenous workers – and contributing more than $21 billion to GDP in 2024. The sector supports another 148,000 indirect jobs across the value chain, making it a critical piece of Canada’s economic engine.
The softwood lumber industry anchors this broader ecosystem. By-products from logging and milling sustain industries such as construction (e.g., mass timber, structural panels), energy (e.g., biofuels), and manufacturing (e.g., furniture, bioplastics, and biochemicals). The pulp and paper industry, which uses sawmill by-products, accounts for a quarter of forest sector employment.
Canada’s softwood lumber industry is also highly trade-exposed, particularly to the United States, where demand for lumber exceeds what domestic mills can supply. In 2024, $7.3 billion in softwood lumber was exported to the U.S., representing nearly 90% of Canadian softwood exports. As of October 2025, most exports face a combined 45.6% duty and tariff rate.
With the cost of production continuing to rise, many sawmills are forced to make difficult decisions. Since 2022, 22 mills have closed and more than 50 have reduced operations – directly affecting over 5,600 workers.
Support to date
Amid a quickly changing global trade landscape, the Government of Canada has taken the following steps to protect Canadian jobs and ensure the softwood lumber industry remains competitive:
- Liquidity support:
- Providing $700 million in loan guarantees, through the BDC Softwood Lumber Guarantee Program, to address the immediate pressures facing the softwood lumber sector.
- Making available more flexible financing through the Large Enterprise Tariff Loan Facility (LETL).
- Providing $500 million to supercharge product and market diversification to make the industry more competitive for the long-term.
- Supporting trade-affected firms pivoting their operations, including Strategic Response Fund and the Regional Tariff Response Initiative.
- Introducing the Buy Canadian Policy.
- Implementing Workforce measures, including:
- A reskilling package to retrain workers;
- Workforce Alliances and Workforce Innovation Fund; and
- Extra weeks of Employment Insurance for long-tenured workers and extension of some EI measures such as treatment of separation payments and waiver of the waiting period.
New measures to support Canada’s softwood lumber industry
Increase protections for Canadian lumber workers
In addition to the $700 million in loan guarantees announced for the Business Development Bank of Canada (BDC) Softwood Lumber Guarantee Program in August 2025, a top-up of $500 million will be delivered to sustain the program into 2026, ensuring companies have the financing and credit support they need to maintain and restructure their operations.
To ease near-term liquidity pressures, the Government will deploy a $500 million envelope from the Large Enterprise Tariff Loan Facility to provide targeted support for softwood lumber producers. Access will be simplified, and the program made more responsive, informed by industry feedback – including the removal of unnecessary disclosure requirements, a review of debt seniority, and more flexible eligibility criteria.
Earlier this year, the government facilitated access to the Employment Insurance (EI) Work-Sharing Program, which helps businesses avoid layoffs during temporary downturns by reducing hours and sharing work among employees. To better support Canadian workers, the federal government is allocating up to $102.7 million over two years, beginning in 2025-26, to provide grants to eligible employers. This funding will help employers enhance supports for workers participating in Work-Sharing agreements. The measure will also increase the income replacement rate for eligible participants who undertake training while on Work-Sharing, benefiting an estimated 26,000 workers across sectors.
Prioritise Canadian lumber through Build Canada Homes
Build Canada Homes will prioritise “shovel-ready” and large-scale multi-year projects that incorporate Canadian wood products and can begin within 12 months. This will create a near-term demand pull for companies to produce value-added wood building products and bring capital into the softwood lumber sector.
Make it more affordable to transport Canadian steel and lumber across the country
In a time of economic uncertainty, our new government will build Canada strong by focusing on what we can control. That includes creating a more unified Canadian economy from east to west. Building big things across this country will require Canadian steel and lumber at a competitive price.
Beginning in Spring 2026, Canada’s new government will provide funds to the Canadian National and Canadian Pacific Kansas City railways to enable a 50% freight rate discount on interprovincial steel and lumber shipments within Canada.
Buy Canadian Policy
Canada’s new government will implement a Buy Canadian Policy to prioritise Canadian materials in all contracts over $25 million. It will also apply to all Government of Canada Grants and Contributions programs, including federal infrastructure funding programs. The policy is focused on supply chains: while it does not require the contracted supplier to be Canadian, it does require Canadian steel, aluminum, and softwood lumber when the value exceeds $250,000.
Establish a single window to support the forestry sector
The federal government is simplifying access to government programs targeting the forest sector. To this end, Natural Resources Canada’s sectoral expertise will be leveraged to:
- develop a concierge pathfinding service for industry to navigate different federal programs, and
- support other departments and agencies with technical expertise to accelerate their processing of applications for softwood operators.
Create the Canadian Forest Sector Transformation Task Force
The Government of Canada is launching the Canadian Forest Sector Transformation Task Force to seek input from provinces, territories, and industry on how to restructure the softwood lumber industry ensure it maintains competitiveness over the long-term.
Over a period of 90 days, the Task Force will examine the opportunities and challenges shaping the sector’s global competitiveness and domestic needs, including considerations for its future scale and structure. At the conclusion of its mandate, it would provide recommendations to expand the use of modern construction methods (such as mass timber and modular systems), diversify products into bioproducts and advanced wood materials, identify new markets, and enhance productivity through innovation and technology adoption.
In addition, the Task Force will develop a high-level roadmap outlining the actions required to support, restructure and reposition the industry, as well as provide recommendations to support communities in regions dependent on softwood lumber.
The Task Force will be co-chaired by two senior leaders from Canada’s forest industry. Membership will include a cross-section of industry leaders from across the country, with emphasis on those with experience in business transformation, integrated forest operations, modular construction, innovation, trade, and First Nations economic development.
Following receipt of the Task Force’s recommendations, the government will take actions to help restructure the sector and better position it for the medium and longer term.