28 July 2025 Canada announces additional support for domestic steel sector
On 16 July 2025, Canada introduced measures to stabilize the domestic steel market and address trade diversion in the wake of tariffs imposed by the United States (US) on imports of steel and aluminum goods. Specifically, Canada will implement a 50% surtax on imports of steel products from most countries with which Canada has a free trade agreement (FTA) if the tariff rate quota (TRQ) of 100% of 2024 levels has been exceeded. Canada will also reduce by half the TRQ applicable to imports of steel products from countries that do not have an FTA with Canada. Additional investments to support the domestic steel sector and Canadian steel workers were also announced. On the same day, the Order Amending the China Surtax Remission Order (2024) and the United States Surtax Remission Order (2025) (the amending Order)was published in the Canada Gazette. This order amends the United States Surtax Remission Order (2025)to provide additional surtax relief for products determined to be in short supply as well as for certain companies that cannot avoid the surtaxes due to contractual obligations or facing other exceptional circumstances. The China Surtax Remission Order (2024)is also amended to modify the scope of certain remissions. On 19 June 2025, Canada announced several measures intended to protect Canadian steel and aluminum producers and workers from the impact of US tariffs; the measures included the establishment of new TRQs of 100% of 2024 levels on imports of steel products from countries that do not have an FTA with Canada. (For more information, see EY Global Tax Alert, Canada announces new border security legislation and further measures to protect steel and aluminum sectors, dated 26 June 2025.) On 27 June 2025, Canada introduced a 50% surtax on certain imports of steel goods from non-FTA countries in accordance with the Order Imposing a Surtax on the Importation of Certain Steel Goods (the Surtax Order). On 16 July 2025, Canada announced the following measures to reduce imports of foreign steel products into the Canadian market:
No changes will apply to existing trade arrangements with the US and Mexico, including recent trade measures relating to the US. On the same day, the Surtax Order was published in Part II of the Canada Gazette as SOR/2025-148. The Surtax Order, which came into force on 27 June 2025, establishes a TRQ of 100% of 2024 levels on imports of certain steel products from non-FTA countries. As noted above, Canada subsequently announced it will reduce the TRQ for non-FTA countries from 100% to 50% of 2024 volumes, presumably in an amending order. The Surtax Order will be repealed on 27 June 2026. For more information, see EY Global Tax Alert, Canada announces surtax on steel imports, initiates short supply consultations, halts DST collection, dated 10 July 2025. Additionally, the Order Amending the Import Control List (made under the Export and Import Permits Act (the ICL Order) was published in the 16 July 2025 Canada Gazette as SOR/2025-149. The ICL Order, which came into force on 27 June 2025, adds steel goods that are subject to the Surtax Order under item 82 of the Import Control List. Importers must obtain a shipment-specific import permit under subsection 8(1) of the Export and Import Permits Act to declare an importation of steel goods to be under the TRQ and be exempted from the surtax. These permits will not be issued after the maximum TRQ quantities have been reached in a quarter, and the surtax will apply to any subsequent importations. In addition to the measures discussed above, Canada announced additional actions to support Canadian steelworkers and domestic steel production. These include changes to the Large Enterprise Tariff Loan (LETL) facility terms to enable the Canada Enterprise Emergency Funding Corporation (CEEFC) to bolster the steel industry further by:
For more information about the LETL facility, see EY Global Tax Alert, Canada | Latest relief measures for Canadian businesses impacted by US tariffs, dated 21 April 2025. As a countermeasure to US tariffs imposed on Canadian goods, including steel and aluminum products, as well as imports of passenger vehicles and trucks, Canada has implemented surtaxes through the following orders in council:
SOR/2025-66 and SOR/2025-95 impose a 25% surtax on various goods imported from the US, including steel and aluminum products. SOR/2025-118 imposes a 25% surtax on non-CUSMA-compliant US-made vehicles and on the non-Canadian and non-Mexican content of CUSMA-compliant US-made vehicles. (For a summary of recent US tariffs and Canadian countermeasures, see these EY Global Tax Alerts: Canada imposes new tariffs on US-origin products in response to US tariffs on Canadian steel and aluminum products, dated 17 March 2025; Canada | Latest Canada-US trade developments — as of 10 April 2025, dated 16 April 2025; and Canada announces surtax on steel imports, initiates short supply consultations, halts DST collection, dated 10 July 2025.) In subsequent public consultations concerning a potential remission framework, various stakeholders indicated that their ability to shift from US suppliers could be limited by a lack of viable alternative suppliers (short supply) or by specific certification or contractual requirements. On 15 April 2025, Canada announced a series of temporary relief measures for Canadian businesses affected by the US tariffs, which included the United States Surtax Remission Order (2025), SOR/2025-122, and the United States Surtax Remission Order (Motor Vehicles 2025), SI/2025-60. The amending Order modifies the United States Surtax Remission Order (2025) to provide additional surtax relief where exceptional circumstances exist and to provide relief for specific motor vehicle imports. Specifically, remission is extended to goods classified under a tariff item listed in the following Schedules:
In general, remission will be provided for listed goods imported into Canada on or after the date the relevant surtax order came into force and before 16 October 2025. However, for goods listed in Schedule 3, the surtax relief period is extended to 13 March 2026. As well, the surtax relief period varies by specific company for goods listed in Schedule 4. In accordance with the China Surtax Order (2024), SOR/2024-187, Canada imposes a 100% surtax on Chinese-made electric vehicles effective 1 October 2024 and a 25% surtax on Chinese-made steel and aluminum products effective 22 October 2024. To provide relief in exceptional circumstances, Canada introduced the China Surtax Remission Order (2024), SOR/2025-12, effective 31 January 2025. This order provides temporary surtax relief on imports of certain steel, aluminum and electric vehicles. Product-specific relief applies to items listed in Schedule 1 of the remission order, while company-specific relief applies items listed in Schedule 2. The amending Order modifies the China Surtax Remission Order (2024) to move the following products from Schedule 1 to Schedule 2, as a domestic source of supply has been identified for these products:
Document ID: 2025-1610 | ||||||||||||||||
