Steel and aluminum tariffs: Who will they hit, and how will Canada respond?

Just one week after Canada was temporarily spared from across-the-board tariffs, U.S. President Donald Trump said he will put 25 per cent tariffs on all of the country's steel and aluminum imports, a move that will particularly sting Canada.

Canada is the biggest supplier of steel and aluminum to the U.S., providing close to one quarter of its steel imports — $15.9 billion worth in 2024 — and almost 60 per cent of its aluminum. 

Roughly 90 per cent of Canada's steel and aluminum exports go to American companies, according to data from Statista.

How will this affect Canadian producers?

The tariffs were already hurting Canadian companies before they became official late Monday, and are expected to hit a wide range of industries including energy, construction and automakers.

Rahim Moloo, owner of the manufacturer and distributor Conquest Steel, told CBC News that U.S. distributors are already cancelling orders and that his Toronto company expects a 25 per cent drop in sales.

The auto industry could see "serious layoffs," in a couple of weeks, said Peter Warrian, an economist with the Munk School of Global Affairs and Public Policy at the University of Toronto.

"This is real trouble," he said. 

WATCH | What to expect from steel tariffs:

How tariffs on Ontario’s steel exports will impact Canada

16 hours ago

Duration 3:18

CBC’s Chris Glover breaks down what you need to know about Ontario’s massive steel industry — and how American tariffs will have ripple effects across Canada.

Auto manufacturing is among the industries that are so integrated, due to free trade, that some parts cross the border multiple times. 

Warrian says it wouldn't make sense to put tariffs on a sheet of steel, for example, that comes from Hamilton and crosses the border five times before it lands in a car. 

"We should be able to get to some sort of modification or exemption, like we did last time," he said, referring to the similar tariffs Trump imposed in 2018.

While details are still unclear, however, Trump said the tariffs will apply "without exceptions or exemptions."

How will Canada respond?

Industry and opposition leaders are pressuring the government to respond forcefully. 

François-Philippe Champagne, the minister of innovation, science and industry, said on X that the tariffs are "totally unjustified" and that he was consulting with international partners.

"We will continue to stand up for Canada, support our workers, and defend our industries," he wrote.

Former finance minister Chrystia Freeland, who is running for Liberal party leadership, used stronger wording in a video message to Trump: "If you force our hand, we will inflict the biggest trade blow that the United States has ever endured."

Conservative Leader Pierre Poilievre said Monday that, if elected, he would retaliate with matching tariffs, while NDP Leader Jagmeet Singh said he would put 100 per cent tariffs on all products made by electric vehicle manufacturer Tesla, whose CEO Elon Musk is one of Trump's top advisers.

In 2018, when Trump imposed a 25 per cent tariff on steel and a 10 per cent tariff on aluminum from Canada, Mexico and other countries, steel exports dropped nearly 40 per cent, and aluminum by more than half.

Canada and Mexico struck back with their own tariffs, all of which were lifted after the Canada-U.S.-Mexico Agreement (CUSMA) was negotiated and signed later that year, replacing the North American Free Trade Agreement. 

What is Trump's goal?

Warrian says Trump is picking points of vulnerability with Canada — with steel, aluminum and oil being our major exports — to "cause pain and get attention."

Because, he says, the move does not make a lot of economic sense for the U.S. on its face, Warrian suspects it is part of a broader plan that involves, among other things, bringing in revenue to offset Trump's planned tax cuts.

Since his November election, Trump has been threatening to impose broad tariffs on Canada and Mexico because of allegedly lax border security.

Trump said Monday the tariffs are meant to encourage production in the U.S., and repeated his suggestion that Canada become the 51st state to avoid further economic punishment. 

"All you have to do is make it in the United States. We don't need it from another country," he said.