Tentative trade deal proposes tariffs on Canadian steel producers exporting to the U.S., but not on U.S. steel producers shipping here, say sources

A heavy forklift operator places a coil of steel onto a flatbed truck at a ArcelorMittal Dofasco site in Hamilton, Ont. Photo by Peter Power/Postmedia files

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A tentative deal being negotiated in Washington, D.C., proposes that Canadian steel mills will face tariffs and quotas on their exports to the United States, but U.S. steel producers won’t face any such barriers in Canada, according to sources who were briefed on the matter.

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The proposed deal will allow Canadian companies to export four million tonnes of steel to the U.S. per year at a 25 per cent tariff rate, but any steel in excess of that volume will face a 50 per cent levy, say sources who were granted anonymity because of the sensitivity of the matter.

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It’s part of a broader trade package being negotiated between the U.S. and Canada after U.S. President Donald Trump threatened to invoke new 50 per cent tariffs on approximately $20-billion worth of Canadian products, including hockey sticks, dairy products and many other items.

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Those tariffs, under Section 338 of the Tariff Act of 1930, were scheduled to take effect on Wednesday, but have been postponed until 12:01 a.m. Saturday pending negotiations.

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A spokesperson for the Prime Minister’s Office said the negotiating team is still in Washington, D.C., and continues to work on the deal.

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“As collaborative efforts with the United States towards a finalized agreement remain ongoing, we will not comment further,” the spokesperson said.

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The proposed deal will lower U.S. tariffs for Canadian steel companies while Canada will drop its countertariffs on U.S. steel, but it arrives as domestic producers are trying to expand their market share here.

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Separately, the Canadian government may also impose new restrictions on foreign steel from other countries, including a 50 per cent tariff on steel imports from countries that lack a free-trade agreement with Canada, according to the sources.

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Countries that have signed a free-trade agreement with Canada could ship 50 per cent of the volume they exported here in 2024 at preferential rates, but face a 50 per cent tariff on steel in excess of that volume, the sources said.

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The current policy, introduced last year, limits non-free-trade countries to shipping 20 per cent of the volume they shipped in 2024, above which they face a 50 per cent tariff. Free-trade countries are limited to 75 per cent of 2024 volumes, above which the 50 per cent tariff kicks in.

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Canada had imposed a 25 per cent tariff on selected U.S. steel products in March 2025 after the U.S. first imposed 25 per cent tariffs on Canadian steel products.

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The U.S. in June 2025 raised its tariffs on Canadian steel to 50 per cent, leading to lower sales and layoffs across the domestic steel industry.

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Historically, the U.S. has been an important market for Canadian steel mills and vice versa, although Canada may be more reliant on the U.S.

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The government estimates Canadian steel mills produced around 12 million tonnes in 2024, with the U.S. being the biggest end market at 6.1 million tonnes. Canada used 5.5 million tonnes of that total, while the rest of the world accounted for the remaining 0.4 million tonnes.