Rebuild Canadian Steel

Summary 

Canada's steel industry is lackluster and shrinking. Imports make up nearly two-thirds of what Canadians use—double the U.S. rate—because of decades of free trade with other nations that are competing on unfair playing fields. Chinese steelmakers in particular flood the market with products made under massive government subsidies and lax environmental standards. At the same time Canada is burdening its own mills with carbon costs making it impossible to win back market share. To fix this Canada must take action to give Canadian steel producers a chance: add tariffs on Chinese and other offshore steel, remove the carbon price on steel production, and use tariff revenue to protect industries hit by Chinese retaliation.  

Supporting The Steel Industry is Not Optional 

Steel is everywhere. It's in buildings, bridges, cars, ships, wind turbines, pipelines, household appliances, and medical equipment. For a modern, industrialized nation, it is as essential to the economy as food or electricity. A country that can't make its own steel is fundamentally weakened in asserting its sovereignty.  

The Unfair Game 

When China joined The World Trade Organization in 2001, it was assumed that it would create a huge market for the rest of the world’s steel. Instead, China used anti-competitive practices to build massive steel capacity which it then used to flood the world market. Today, China makes more steel than the rest of the world combined: 1,019 million tonnes annually compared to Canada's 12-13 million tonnes. That's 54% of global production from one country¹. 

The Chinese government pours money into steel companies with subsidies worth $50 to $100 per tonne of steel. 10 times more than wealthy countries and 5 times more than other developing nations² — this fundamentally changes the economics of the industry. Chinese steelmakers can sell at artificially low prices and still make money because government cheques back home cover the difference. 

Meanwhile, Canada does the opposite. Instead of helping steelmakers, Canada charges them $95 per tonne of carbon emissions through the industrial carbon price – set to increase to $170 per tonne by 2030³. When that is combined with stringent environmental protections and other rigorous regulations, it becomes impossible to compete. A Canadian mill faces $95 per tonne in combined costs that Chinese and other offshore competitors simply don't have.  

The Results 

This imbalance has led to a long, slow decline in Canada's steel sector. Canada has gone from producing 16.6 million tonnes annually in 2000⁴ to 12.2 million tonnes in 2023⁵. To make up for the difference, the country relies on imports. Today, the majority of the steel used in Canada comes from overseas—usually from cheap, government-subsidized steel that undercuts domestic producers. 

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And, the situation is much worse than in comparable nations. Canada is uniquely vulnerable to dumping because its production capacity is small and a lack of trade barriers leaves the country flooded with cheap imports. As Prime Minister Carney put it in his speech yesterday: “while 80% of the steel Europe buys is manufactured in Europe and 75% of the steel in the U.S. is manufactured there, only 40% of the steel bought in Canada is made here.” ⁶

Having a strong steel industry is essential to long-term security. But even in its current reduced state the industry is still vital to the country’s prosperity. The Canadian steel industry employs 23,000 people⁷, mostly good-paying skilled jobs that average $1,541 per week with workers concentrated in Ontario (52% of jobs) and Quebec (34%)⁸. Often development patterns mean the communities where these jobs are most densely concentrated rely on steel mills as the backbone of the economy.  

Beyond direct employment it is estimated that there are 100,000 additional jobs that depend on a healthy steel sector—in construction, manufacturing, energy, and transportation. In a world of increasingly unfair trade practices and a lack of support for the industry all of this is at risk. 

Already, recent tariff actions that have made Canadian steel less competitive in the US have triggered close to 1,000 job losses by mid-2025, with more anticipated⁹. 

Why This Moment Matters 

If Canada doesn't create a fair domestic market, there's no future for a Canadian steel industry. The good news is there is excess demand in an internal market – that is still growing – for Canadian steel makers to supply. Not accounting for future growth as a result of renewed defense spending.  

If trade adjustments are implemented in the right way there's also an opportunity to improve our overall relationships with other nations. The U.S. has already taken action, imposing tariffs on all foreign steel. If Canada matches these tariffs, manufacturers and other steel consumers would buy Canadian steel and thus consume more of its own production. With protections against overseas steel that match the U.S. standards Canada will be in a much stronger negotiating position as it won't look to the US market to ship the excess production that was displaced by offshore steel imports. Effectively Canadian steel will not be a threat to the US industry. 

The Solution 

To fix the situation Canada needs to create a competitive market this includes:  

• Putting tariffs on offshore steel at rates comparable to the U.S. to ensure Canadian mills compete on quality and efficiency rather than government subsidies.  

• Removing the carbon price on steel production – steelmakers are already investing billions in cleaner technologies like electric arc furnaces that will reduce emissions by 45-70% by 2030¹⁰ – adding a carbon tax while competitors receive Chinese subsidies would be counterproductive.  

• Allocating tariff revenue to support Canadian industries that may face retaliation from other countries, helping affected sectors adjust, invest, and remain competitive despite potential trade pushback. 

What Must Be Done 

Impose 50% tariff on all Offshore steel imports, matching U.S. rates¹¹. This instantly makes Canadian steel price-competitive with subsidized imports. Tariffs restore normal pricing, allowing mills to operate sustainably and invest in modernization. Implementation requires a tariff order through Parliament; revenue flows to federal coffers. Timeline: immediately 

Remove the carbon price on primary steel production. Steelmakers should face the same carbon costs as international competitors, not higher ones. Producers already face emissions regulations and are investing billions in clean technology—add a tax that Chinese competitors don't pay and Canada loses. Legislative change needed; effective immediately upon passage. This removes $95 per tonne of artificial cost burden. 

Establish a tariff revenue stabilization fund for trade-affected industries. When Canada protects steel, other countries may retaliate against Canadian goods. Use tariff revenues to help affected manufacturers, agriculture exporters, and workers transition and adjust. Administer through existing trade adjustment programs. Make funds available as needed. 

Help steelmakers to prioritize domestic market growth. Canadian mills currently export roughly 90% of production to the U.S¹². With tariffs in place, domestic demand becomes viable. Convene industry and government quarterly to identify domestic supply gaps (specialty products, construction-grade steel) and connect producers with buyers. No new agency or funding is needed but a new mandate and focus with existing industry councils will go a long way. 

Common Questions 

Won't tariffs make steel more expensive for Canadian businesses? 
Tariffs restore normal pricing, which actually benefits most Canadian users because dumped steel damages long-term supply reliability. Current low prices come from government subsidies, not efficiency—they can't last. Plus, Canadian steelmakers competing fairly will invest in cost reduction and quality, ultimately benefiting buyers. Evidence: the U.S. economy absorbed tariffs without major damage while protecting industry viability. 

Will other countries retaliate?
Possibly, but Canada can prepare. The tariff revenue fund cushions impact on vulnerable sectors. More importantly, tariffs now position Canada to negotiate as part of a North American bloc with the U.S., which is stronger than negotiating alone. China retaliates more against weak countries than strong ones. 

Doesn't this violate free trade agreements? 
No. Both USMCA and WTO allow tariffs to counter unfair practices like dumping and government subsidies. Canada already maintains anti-dumping duties on Chinese and other offshore steel under these same rules. This is consistent action, not a new principle. 

Why remove carbon pricing instead of keeping environmental standards? 
Steelmakers aren't avoiding environmental rules—they're investing billions in electric furnaces and clean technology. The carbon price adds a separate cost competitors don't face. Remove the price while keeping the regulations, and mills can invest profits in cleaner equipment rather than paying taxes. This accelerates decarbonization while keeping mills competitive. 

Conclusion 

Steel is essential to all infrastructure and ultimately national security. Canada cannot ensure its strength and survival long-term if it has to depend on foreign countries for something so essential. China and others subsidize steel while Canada penalizes it—if nothing serious is done this will ensure the loss of an entire industry. By matching U.S. tariffs and removing the carbon price on steel Canada can reclaim its domestic market and position itself as a reliable North American partner.  

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