Order Imposing a Surtax on the Importation of Certain Steel Goods: SOR/2025-148

Canada Gazette, Part II, Volume 159, Number 15

Registration
SOR/2025-148 June 26, 2025

CUSTOMS TARIFF

P.C. 2025-534 June 26, 2025

Her Excellency the Governor General in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, makes the annexed Order Imposing a Surtax on the Importation of Certain Steel Goods under paragraphs 53(2)(d) and 79(a)footnote a of the Customs Tariff footnote b.

Order Imposing a Surtax on the Importation of Certain Steel Goods

Interpretation

Origin of goods

1 For the purposes of this Order, the origin of goods is determined in accordance with the rules of origin set out in the Determination of Country of Origin for the Purpose of Marking Goods (CUSMA Countries) Regulations or the Determination of Country of Origin for the Purpose of Marking Goods (Non-CUSMA Countries) Regulations, as the case may be.

Surtax

50% surtax

2 (1) Subject to section 3, goods that are classified under a tariff item set out in column 4 of Schedule 1, as well as those that are otherwise classifiable under one of those tariff items but are classified under a tariff item of Chapter 99 of the List of Tariff Provisions, are subject to a surtax in the amount of 50% of their value for duty determined in accordance with sections 47 to 55 of the Customs Act if

Quarterly period

(2) For the purposes of subsection (1), a quarterly period is a three-month period, the first of which begins on the day on which this Order comes into force.

Carry forward of unused portion

(3) If the quantity of goods of a class imported during a quarterly period is less than the quarterly total set out in column 2 of Schedule 1, the unused portion is carried forward into the next quarterly period.

Import permit

(4) Goods are considered to be imported in excess of the limits set out in subsection (1) if they are not imported under a permit that is issued under subsection 8(1) of the Export and Import Permits Act in respect of steel goods referred to in item 82 of the Import Control List and that is valid at the time at which the goods are accounted for under subsection 32(1), (3) or (5) of the Customs Act.

Exceptions

3 The following goods are not subject to the surtax and are excluded from the determination of the quantity of goods imported:

Repeal of this Order

4 This Order is repealed on the first anniversary of the day on which it comes into force.

Repeal

5 The Order Imposing a Surtax on the Importation of Certain Steel Goods footnote 1 is repealed.

Coming into Force

June 27, 2025

6 This Order comes into force on June 27, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.

SCHEDULE 1

(Subsections 2(1) and (3) and paragraph 3(d))

Importation Quotas
Item

Column 1

Class of Goods

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country

Column 4

Tariff Item
1 Flat 186,856 36% 7208.10.00
7208.25.00
7208.26.00
7208.27.00
7208.36.00
7208.37.00
7208.38.00
7208.39.00
7208.40.00
7208.51.00
7208.52.00
7208.53.00
7208.54.00
7208.90.00
7209.15.00
7209.16.00
7209.17.00
7209.18.00
7209.25.00
7209.26.00
7209.27.00
7209.28.00
7209.90.00
7210.11.00
7210.12.00
7210.49.00
7210.50.00
7210.61.00
7210.69.00
7210.70.00
7210.90.00
7211.14.00
7211.19.00
7211.23.00
7211.29.00
7211.90.00
7212.10.00
7212.30.00
7212.40.00
7212.50.00
7225.19.00
7225.30.00
7225.40.00
7225.50.00
7225.91.00
7225.92.00
7225.99.00
7226.91.00
7226.92.00
7226.99.00
2 Long 178,512 28% 7213.10.00
7213.20.00
7213.91.00
7213.99.00
7214.10.00
7214.20.00
7214.91.00
7214.99.00
7216.10.00
7216.21.00
7216.22.00
7216.31.00
7216.32.00
7216.33.00
7216.40.00
7216.50.00
7216.99.00
7217.10.00
7217.20.00
7217.30.00
7217.90.00
7224.10.00
7227.10.00
7227.20.00
7227.90.00
7228.30.00
7228.40.00
7228.50.00
7228.60.00
7228.70.00
7228.80.00
7229.20.00
7229.90.00
7301.10.00
7301.20.00
3 Pipe and Tube 117,406 47% 7304.19.00
7304.22.00
7304.23.00
7304.24.00
7304.29.00
7304.39.00
7304.59.00
7304.90.00
7305.11.00
7305.12.00
7305.19.00
7305.20.00
7305.31.00
7305.39.00
7305.90.00
7306.19.00
7306.29.00
7306.30.00
7306.50.00
7306.61.00
7306.69.00
7306.90.00
4 Semi-Finished 152,383 72% 7206.10.00
7206.90.00
7207.11.00
7207.12.00
7207.19.00
7207.20.00
7224.90.00
5 Stainless 5,568 91% 7218.10.00
7218.91.00
7218.99.00
7222.30.00
7222.40.00
7304.49.00

SCHEDULE 2

(Paragraph 3(b))

Exempted countries

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the orders.)

Issues

Due to restrictive trade measures taken by the United States (U.S.) through its imposition of tariffs under section 232 of the U.S. Trade Expansion Act of 1962 (Section 232) on steel and aluminum imports, as well as the long-standing global excess capacity in steel supply caused by non-market practices of certain foreign governments, there is a significant risk of trade diversion of steel products into Canada, which threatens to adversely affect the Canadian steel industry. To stabilize the domestic steel market, the Government is imposing temporary trade measures to address the risk of steel trade diversion from third countries into the Canadian market.

Background

On June 4, 2025, U.S. President Trump issued a proclamation that increased Section 232 tariffs applicable to steel, aluminum and derivatives from 25% to 50%. This follows the extension of these tariffs to all countries, including previously exempted countries (such as Canada), effective March 12, 2025.

As a result of these unjustified actions by the U.S., important volumes of steel are expected to be shut out of the U.S. and could end up being diverted to other markets, including Canada. In addition, other trading partners have imposed measures restricting steel imports to protect their steel industry and prevent diversion of steel goods into their market, including the European Union (EU), which first imposed measures in 2019 and further strengthened them in March 2025. On June 9, 2025, the EU also launched a surveillance tool to monitor trade diversion and protect against sudden surges of imports and began setting up a dialogue with China to track and address diversion.

These developments take place in the context of a global steel market that has been and continues to be oversupplied. This severe excess capacity caused by non-market policies and practices in certain countries is spreading into global supply chains leading to foreign steel being sold at artificially low prices in Canada, affecting the profitability and long-term viability of Canadian steel producers. These non-market policies and practices include, but are not limited to, pervasive subsidization, and insufficient or non-existent labour and environmental standards, contrary to Canadian values. When such unfairly traded steel enters the Canadian market, it negatively affects Canadian steel workers and businesses.

Following recent U.S. tariffs, there is a heightened risk that global steel products will be diverted into the Canadian market. The steel industry is an important sector for the Canadian economy, and supports over 23 000 high-skill, high-wage jobs and contributed $3 billion to Canada’s gross domestic product in 2024. The industry serves as a hub for other manufacturing activities and supports upstream and downstream industries that reinforce local and regional economies. There are 10 steelmaking firms in Canada, operating 16 steel mills in 5 provinces. Approximately 75% of Canadian steelmaking capacity is situated in Ontario and another 15% is located in Quebec.

On March 22, 2025, in light of the expansion of Section 232 tariffs to all trading partners on March 12, 2025, the Government of Canada announced it was considering trade measures to address trade diversion and protect Canada’s steel industry. As part of this announcement, the Government launched a 30-day public consultation period concerning potential trade measures to prevent the diversion of steel products into Canada.

On June 19, 2025, the Government announced a series of measures to address risks to the steel industry. This included the following:

The orders addressed in this Regulatory Impact Analysis Statement (RIAS) implement the tariff rate quotas measure referenced above. In Canada, the requirements for imposing these trade measures are set out in the Customs Tariff. Specifically, the Customs Tariff allows the Governor in Council to impose trade measures on the recommendation from the Minister of Finance and the Minister of Foreign Affairs, in response to acts, policies or practices of a foreign government that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

To facilitate those trade measures when they take the form of a tariff rate quota (TRQ), the Governor in Council is also authorized to add goods subject to those trade measures to the Import Control List (ICL), established under section 5(1) the Export and Import Permits Act. The purpose of the ICL is to list the goods which are subject to import controls in Canada for various trade-related and strategic reasons. Import permits and certificates are issued by Global Affairs Canada on behalf of the Minister under the Act.

Objective

Prevent adverse effects to domestic steel producers and workers caused by expected diversion of global steel products resulting from the U.S. steel tariffs.

Description

The Order Imposing a Surtax on the Importation of Certain Steel Goods (the Surtax Order), made pursuant to section 53 of the Customs Tariff, imposes temporary trade measures in the form of separate TRQs for one year on imports of flat, long, pipe and tube, semi-finished, stainless steel products that fall under a tariff classification set out in Schedule 1 to the Surtax Order. The Surtax Order applies to imports from all countries, except those originating from free-trade agreement partners and from Canada. Goods that are in transit to Canada on or before the date that this Surtax Order enters into force are excluded.

The TRQ will permit a volume of imports for each of the five classes of steel goods corresponding to 100% of import volumes in 2024 from the subject countries to be imported without this additional surtax. The annual quota is divided into quarterly periods, with any unused quantity in a period being carried forward into the next period. The quota available in each quarterly quota is also subject to a quantity limit per country of origin, which reflects historical trade patterns. These mechanisms are intended to minimize disruptions in supply and to ensure that quota can be available throughout the one-year period. Any volumes imported above the quantity threshold will be subject to a 50% surtax. Shipment-specific import permits will be used to facilitate the administration of the quantity threshold and determination of whether an importation will be subject to the surtax. Specifically, importations made under a valid permit in respect of item 82 of the ICL are deemed to have been imported within the surtax-free quota (see the description of the Order Amending the Import Control List below). When applied, the surtax will be calculated on the basis of the value for duty of the imported goods, the value for duty being determined as per the methodology laid out in sections 47 to 55 of the Customs Act, and will apply in addition to any applicable customs duty imposed under the Customs Tariff.

To facilitate administration of the Surtax Order, the Order Amending the Import Control List amends the ICL to add the list of steel goods subject to the Surtax Order under item 82. The addition of these goods as item 82 to the ICL makes import permits a requirement in order for these goods to benefit from quotas upon entry into force of the Surtax Order. Importers are able to apply for shipment-specific import permits that will allow these goods to be exempt from the 50% surtax. Import permits will not be issued once the quantities indicated in the Schedule 1 to the Surtax Order are reached. Goods may continue to be imported after that point, provided that the requirements of any other general import permits are met, but will be subject to the surtax.

Regulatory development

Consultation

From March 22 to April 21, 2025, the Government of Canada held public consultations on possible trade measures to protect against the threat of diversion of steel products from third countries into the Canadian market. The consultations were not specific to TRQs nor any specific measure. The Department of Finance received close to 80 submissions from a variety of stakeholders, including businesses, industry associations, unions and provincial governments. Steel producers expressed support for protective trade measures, while downstream industries generally expressed concerns over supply of certain raw materials and cost impacts that may affect their competitiveness. Certain provincial governments and other submissions have raised regional issues, noting that trade measures risk limiting supply of steel goods leading to higher prices and project delays for provinces farther away from Canadian steel mills in central Canada, given that shipping costs for some products may be prohibitive. All comments have been taken into consideration in determining the appropriate course of action.

The Government will continue to engage affected stakeholder groups as this measure is implemented. The Surtax Order will be reviewed in 30 days and periodically thereafter to account for developments in the market, ongoing trade discussions with other countries, and to assess impacts and determine whether adjustments, including potential extensions or termination, are appropriate.

Modern treaty obligations and Indigenous engagement and consultation

Following an assessment of modern treaty implications, no adverse impacts on potential or established Indigenous or treaty rights, which are recognized and affirmed in section 35 of the Constitution Act, 1982, were identified in the Surtax Order.

Instrument choice

Subsection 53(2) of the Customs Tariff provides the authority for the Governor in Council, on the recommendation of the Minister of Finance and the Minister of Foreign Affairs, by order, to make goods that originate in any country subject to a surtax for the purpose of responding to acts, policies or practices of a country that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada.

It was determined that the Government needed to take immediate measures to stabilize the Canadian steel market, given the imminent risk of diversion of steel imports into Canada and the resulting damage to industry and workers that would be difficult to repair. Section 53 of the Customs Tariff is the only instrument available that would effectively address the expected diversion of steel imports into Canada in a timely and effective manner.

Subsection 5(6) of the Export and Import Permits Act provides authority for the Governor in Council to add goods to the Import Control List if, for the purpose of facilitating the implementation of action taken under paragraph 53(2)(d) of the Customs Tariff, the Governor in Council considers it necessary to control the importation of those goods or collect any information with respect to their importation.

Regulatory analysis

Benefits and costs

This trade measure is intended to protect Canada’s steel industry and workers from the diversion of steel into the Canadian market and the persistent global excess capacity caused by non-market practices of certain foreign governments, including insufficient or non-existent labour and environmental standards that are contrary to Canadian values.

This measure is designed in a way that preserves historical trade volumes, while protecting against significant import growth, and will avoid unintended or undue impacts on downstream industries that rely on imported steel inputs. This is a time-limited measure that is intended to be in place for one year, subject to the outcomes of future review processes.

For businesses wishing to import subject steel goods within the quantity set by the Surtax Order (without paying the surtax), there will be incremental costs associated with permit fees of up to $31 per permit. The permit fee is determined by the value of the goods and varies depending on whether the permit is issued through a customs broker or by Global Affairs Canada. It is estimated that roughly 33 300 permits could be issued over the year for a total estimated cost to business of $1,032,300. The surtax savings to importers will far outweigh the costs associated with requesting import permits. Importers who do not wish to apply for a shipment-specific permit may import these goods without quantitative limits under an applicable General Import Permit, but these imports will be subject to the 50% surtax. Industry may also incur costs and require time to implement system changes needed to be compliant with the Surtax Order upon its coming into force.

In addition to costs associated with permit fees, potential delays in the issuance of import permits as the Government stands up the relevant permit processes may require importers to pay surtax on all applicable shipments of subject steel goods. In such instance, importers will be able to request a refund on any overpaid surtax after obtaining a valid retroactive permit for the shipments. In the interim period between accounting and the receipt of potential refunds, business cash flows may be impacted and associated costs could accrue to those businesses.

Small business lens

Analysis under the small business lens determined that the measure will impose administrative and compliance requirements on Canadian small businesses. Processes for obtaining import permits may present barriers to entry for small businesses. In the event of delays in receiving import permits, the obligation to request refunds or remissions on any overpaid surtax may impose additional administrative burden on importers, with effects disproportionately felt by small businesses. No additional flexibility is being provided to small businesses, as this measure is designed to protect Canadian industry, and the administrative requirements are integral to its design and function.

One-for-one rule

The one-for-one rule applies since there is an incremental increase in the administrative burden on businesses. However, duties are considered taxes for the purposes of the one-for-one rule, and paragraph 6(a) of the Red Tape Reduction Regulations authorizes the Treasury Board to exempt regulations related to tax and tax administration. As a result, the orders are exempted from the requirement to offset burden and titles under the rule.

The orders impose some administrative and financial burden on steel importers. Steel importers of applicable goods would now need to apply and pay for a shipment specific permit, whereas they previously could just cite a General Import Permit. The application process could include applying for an Export and Import Permits Act (EIPA) number and updating or changing their technical systems.

Regulatory cooperation and alignment

Canada is taking action to ensure that its steel industry is not unduly affected by trade diversion as a result of U.S. tariff actions and global excess capacity, and it will engage, as needed, with other international partners who may be affected by these issues.

Effects on the environment

Limiting diversion of steel imports from certain non-market countries, which are among the most carbon-intensive in the world, is expected to have positive environmental impacts, as these steel imports are expected to be replaced by domestic and other foreign sources that are less carbon-intensive. For example, the average CO2 emissions intensity for steel production in China (PDF) is about 1.9 tons of CO2 per ton produced; this is similar to Brazil. For India, it is about 2.2 tons. Conversely, Canada is relatively cleaner at approximately 1.2 tons. The ultimate impact will depend on the degree to which the surtax alters trade patterns and the relative carbon intensity of alternative sources.

Gender-based analysis plus

No impacts based on gender and other identity factors have been identified for these orders.

Rationale

The decision to impose temporary trade measures on imports of certain steel goods is based on a recommendation from the Minister of Finance and National Revenue and the Minister of Foreign Affairs to the Governor in Council, pursuant to section 53 of the Customs Tariff, assessing that unjustified Section 232 tariffs on steel, coupled with continued global oversupply due to the non-market policies and practices of certain countries, will adversely affect, or lead directly or indirectly to adverse effects on, trade in goods and services of Canada.

For the five classes of steel goods covered by the Surtax Order, there is reasonably high likelihood diversion of steel into the Canadian market, which will adversely affect the domestic industry producing such goods. Specifically, the trade restrictive actions recently taken by the U.S. and other steel trading countries have created an imminent risk of diversion of steel into Canada, such that delay in imposing measures would adversely affect the Canadian market. For example, approximately $48 billion in U.S. imports from previously exempted countries in 2024, excluding Canada (48.5% of U.S. steel imports), are now subject to the 50% tariff (with the exception of the United Kingdom at 25%) and may be seeking alternative markets. In 2018, the application of global Section 232 tariffs reduced steel imports to the U.S. by approximately 24%. Furthermore, in its April 2025 Global Trade Outlook, the World Trade Organization (WTO) forecasted a significant redirection of trade flows triggered by current U.S. tariffs. For example, U.S. imports from China are expected to decrease by upwards of 77%, with Chinese exports expected to increase in other markets globally (including 25% to North America, excluding the U.S.). Canada is an attractive market for diverted steel products because of a tariff differential between the Canadian and U.S. markets and, in general, steel prices in Canada are higher than in other markets worldwide.

Further, the global steel industry is marked by substantial excess supply, with the outlook for global capacity growth far outpacing demand. Global excess capacity is expected to reach 721 million metric tonnes by 2027; which is nearly 20 times the size of steel consumption in North America. Pervasive non-market policies and practices by certain countries in the steel sector, often utilizing higher carbon production technology, have contributed to persistent, non-market structural excess capacity, affecting the profitability and long-term economic viability of market-oriented Canadian firms. These non-market policies and practices include, but are not limited to, pervasive subsidization, insufficient or non-existent labour and environmental standards that are contrary to Canadian values, and other measures to artificially lower production costs. As a result, certain countries are exporting steel at unfairly low prices, distorting global value chains.

The Organisation for Economic Co-operation and Development (OECD) has projected substantial increases in planned steelmaking capacity of up to 6.7% (165 million metric tonnes) worldwide from 2025 to 2027, fuelled by cross-border investments by steel companies in non-market countries. There is also evidence of significant circumvention of trade rules related to steel products, including evasion of trade remedy measures and transshipment through third countries. For example, over the period of 2013 to 2020, OECD analysis concluded that the trading of 21.5 million metric tonnes (or approximately 17.6% of total steel trade) could be considered “suspicious trade.” Further, the OECD has also shown a five-fold increase in antidumping investigations involving steel products in 2024 compared to 2023 by over a dozen governments —with a growing number of countries introducing trade measures to protect their steel industries.

Since tariffs were imposed by the U.S. on global sources of steel imports in March 2025, some Canadian steel companies have announced operational changes and associated job impacts. This is expected to further worsen with the June 2025 doubling of U.S. tariffs and increased risk of trade diversion. Imposing trade measures on imports of flat, long, pipe and tube, semi-finished, and stainless steel products directly responds to the adverse effects of diversion of steel into the Canadian market from additional expected import increases in current circumstances. The intent behind these temporary trade measures is to stabilize the market and to avoid the situation from deteriorating further.

The Government has taken the approach of determining a quantity for each of the five classes of goods, set in the relevant schedule to the Surtax Order, to be imported into Canada without a 50% surtax. That quantity corresponds to the volume of imports from the covered countries in 2024. Imports in each quarterly period above the quantity set for each class of goods, or that exceeds the country of origin quantity limit during that period, will be subject to a 50% surtax. This ensures that imports consistent with historical trade levels will continue to enter Canada without the imposition of a surtax.

Implementation, compliance and enforcement, and service standards

The orders will come into force on June 27, 2025, but if they are registered after that day, they come into force on the day on which they are registered. Subject to any amendments, they are repealed on the first anniversary of the day on which they come into force.

The orders will be reviewed in 30 days and periodically thereafter to account for market developments, ongoing trade discussions with other countries, and to assess impacts and determine whether adjustments, including potential extensions or termination, are appropriate. The reviews will be supported by a newly established industry-government steel task force. This task force will meet regularly to closely monitor trade trends to support government decision-making with the objective of better protecting Canadian industry and workers, and will help ensure that assessment of the temporary trade measure is informed by data and evidence — and that it will achieve intended objectives without undue harm to the Canadian economy.

The Canada Border Services Agency (CBSA) is responsible for administering Customs Tariff legislation and regulations, and Global Affairs Canada (GAC) is responsible for issuing import permits for goods on the Import Control List, under the Export and Import Permits Act. In the course of the administration of the Surtax Order, the CBSA and GAC will inform the importing community of the process related to the administration of surtaxes and guidance related to the administration of import permits (see CBSA’s Customs Notice and GAC’s Notice to importers).

The Government will continue collecting and analyzing information for “country of melt and pour,” consistent with the requirements of the General Import Permits 80 and 81, to provide enhanced supply chain transparency.

Contact

Alan Ho
Director Strategic Issues
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Email: fin.simaconsult-lmsiconsult.fin@fin.gc.ca