Steel Goods and Aluminum Goods Surtax Order: SOR/2025-154

Canada Gazette, Part II, Volume 159, Number 17

Registration
SOR/2025-154 July 30, 2025

CUSTOMS TARIFF

P.C. 2025-592 July 30, 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 Steel Goods and Aluminum Goods Surtax Order under subsection 53(2)footnote a and paragraph 79(a)footnote b of the Customs Tariff footnote c.

Steel Goods and Aluminum Goods Surtax Order

Interpretation

Definitions

1 The following definitions apply in this Order.

aluminum goods
means
  • (a) goods that are classified under a tariff item set out in Part 2 of the schedule; or
  • (b) goods that are classified under a tariff item of Chapter 99 of the List of Tariff Provisions that are otherwise classifiable under a tariff item set out in Part 2 of the schedule. (marchandises en aluminium)
steel goods
means
  • (a) goods that are classified under a tariff item set out in Part 1 of the schedule; or
  • (b) goods that are classified under a tariff item of Chapter 99 of the List of Tariff Provisions that are otherwise classifiable under a tariff item set out in Part 1 of the schedule. (marchandises en acier)

Steel melted and poured in China

2 (1) For the purposes of this Order, goods contain steel melted and poured in China if the raw steel, or any portion of the raw steel, contained in the goods was first produced in a liquid state in a steel-making furnace and poured into its first solid state — which can take the form of a semi-finished or finished steel mill product — in China.

Aluminum smelted and cast in China

(2) For the purposes of this Order, goods contain aluminum smelted and cast in China if

Surtax

Surtax — steel goods

3 (1) Steel goods that contain steel melted and poured in China are subject to a surtax in the amount of 25% of the value for duty determined in accordance with sections 47 to 55 of the Customs Act.

Deeming

(2) Steel goods are deemed to contain steel melted and poured in China if the importer fails to provide, when requested by an officer, a certificate, report or commercial invoice that demonstrates that the goods do not contain steel melted and poured in China.

Surtax — aluminum goods

4 (1) Aluminum goods that contain aluminum smelted and cast in China are subject to a surtax in the amount of 25% of the value for duty determined in accordance with sections 47 to 55 of the Customs Act.

Deeming

(2) Aluminum goods are deemed to contain aluminum smelted and cast in China if the importer fails to provide, when requested by an officer,

Exceptions

5 Despite sections 3 and 4, the following steel goods and aluminum goods are not subject to the surtax:

Amendments to This Order

6 Subsection 3(2) of this Order is replaced by the following:

Deeming

(2) Steel goods are deemed to contain steel melted and poured in China if the importer fails to provide, when requested by an officer, a certificate that demonstrates that the goods do not contain steel melted and poured in China.

7 Subsection 4(2) of this Order is replaced by the following:

Deeming

(2) Aluminum goods are deemed to contain aluminum smelted and cast in China if the importer fails to provide, when requested by an officer, a certificate that demonstrates that

Coming into Force

Registration

8 (1) Subject to subsection (2), this Order comes into force on July 31, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.

September 22, 2025

(2) Sections 6 and 7 come into force on September 22, 2025.

SCHEDULE

(Section 1 and paragraph 5(d))

Tariff Items — Goods Subject to Surtax

PART 1

Steel Goods

PART 2

Aluminum Goods

REGULATORY IMPACT ANALYSIS STATEMENT

(This statement is not part of the Order.)

Issues

China is engaging in non-market acts, policies, and practices with respect to their steel and aluminum sectors which could lead to an increase of Chinese imports that adversely affect domestic production, as well as planned investments in Canada’s steel and aluminum industries.

Existing tariffs and other recent import measures by various countries, including Canada, to address this issue have the effect of decreasing direct imports from China into countries imposing these measures. However, such measures also create an incentive for China to export their steel and aluminum to other countries along the supply chain for further manufacturing before being exported to their final destination, including to Canada, without being subject to tariffs applicable to China. This results in the spreading of non-market driven overcapacity throughout steel and aluminum global value chains, creating adverse impacts that affect Canadian domestic production, and threaten the long-term viability of the Canadian industry.

Background

Steel and aluminum and their associated supply chains represent strategic sectors in the Canadian economy. These goods serve as a critical input in a variety of downstream industries, such as automotive production, transportation, construction, renewable energy, packaging and electrical/electronic sectors.

Canada, along with like-minded trading partners and the Organisation for Economic Co-operation and Development (OECD), have long noted concerns about structural overcapacity in steel and aluminum and the associated impacts on global trade, and the role that certain government policies and practices can play in driving this overcapacity.

China is the world’s largest steelmaker, producing over one billion metric tonnes in 2023 (i.e. 54% of global production). Despite softening global demand, China has increased its capacity by 18.6 million metric tonnes (more than Canada’s total production capacity) since 2018. Similarly, China’s primary aluminum capacity has grown from 11% of global production to 59% over the last two decades, with the Chinese government providing support of up to $70 billion between 2013 and 2017 alone, according to the OECD.

Non-market policies and practices by the Chinese government in these sectors, often utilizing higher carbon production technology, have contributed to persistent, non-market structural overcapacity, affecting the profitability and long-term economic viability of market-oriented Canadian firms.

China’s 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, China is exporting steel and aluminum at unfairly low prices, distorting global trade. There has already been nearly a doubling of imports of steel and aluminum made in China into the Canadian market between 2020 (356 914 tonnes) and 2024 (689 734 tonnes).

Canada has found evidence of significant and diverse acts, policies and practices from the Chinese government that support steel and aluminum manufacturing and the production of key inputs. These non-market policies and practices include

These non-market policies and practices benefit Chinese-made steel and aluminum leading to excess capacity, distorted price signals, and artificially low manufacturing costs that depress global prices.

Reflective of this, in June 2024, G7 Leaders committed to “acting together to promote economic resilience, confront non-market policies and practices that undermine the level playing field and our economic security, and strengthen our coordination to address global overcapacity challenges.” As a result, an increased number of countries have introduced or strengthened measures on Chinese steel and aluminum, including Canada.

Canada may apply trade measures (including surtaxes) to respond to acts, policies or practices of other countries’ governments that adversely affect, or lead directly or indirectly to adverse effects on, trade in goods or services of Canada. Canada has already taken action to address imports of steel and aluminum from China. On October 22, 2024, Canada imposed a surtax of 25% on imports of Chinese steel and aluminum to address the adverse effects of China’s non-market acts, policies and practices in the steel and aluminum sectors. This surtax applies only to steel and aluminum originating in China.

These measures have not been sufficient to address the impacts of global overcapacity driven by Chinese non-market policies and practices. Although these surtaxes target the direct imports of steel and aluminum, the measures also created incentives that have resulted in overcapacity (through exports or investment) being exported to third countries, which then export their goods containing Chinese steel and aluminum to Canada. For example,

As trade-oriented industries, Canadian steel and aluminum producers continue to face challenges resulting from global overcapacity, and from products exported from diverse countries that are made from Chinese-produced steel and aluminum. Imports of steel and aluminum made from low-cost Chinese-produced steel and aluminum undermine investments in the sectors, including devaluing existing investments and deterring future investments. Therefore, they lead, directly or indirectly, to adverse effects on the trade in steel and aluminum of Canada.

This situation is further exacerbated by U.S. tariffs of 50% on all steel and aluminum imports imposed on June 4, 2025 (increased from the 25% tariffs imposed by the U.S. on March 12, 2025), since imports containing artificially low-priced Chinese steel and aluminum originally destined for the U.S. will be seeking new markets.

As an additional response measure to U.S. tariffs, on March 13, 2025, Canada imposed 25% retaliatory tariffs on $29.8 billion worth of imports from the U.S. including $12.6 billion in steel products and $3 billion on aluminum products.

Additionally, on June 27, 2025, the Government imposed tariff-rate quotas (TRQ) set at 100% of 2024 imports of steel products from non-free trade agreement (FTA) partners, to stabilize the domestic steel market in the face of potential diversion. Imports above specified quota levels are subject to a 50% surtax. On July 16, 2025, Canada announced that it will tighten the TRQ levels for steel products from non-FTA countries to 50% of 2024 volumes and apply a 50% tariff on steel imports beyond those levels. For non-CUSMA countries with FTAs in force with Canada, Canada will introduce a TRQ level for steel products at 100% of 2024 volumes and apply a 50% tariff on steel imports above those levels. There will be no changes for CUSMA partners.

A number of G7 countries are also taking individual action on the growing trend of exporters seeking to circumvent trade measures by diverting their exports through third-country markets. For example, the U.S. steel and aluminum tariffs are intended, in part, to address concerns that more targeted trade remedies do not address these indirect effects of Chinese overcapacity. The European Commission notes in its European Steel and Metals Action Plan that their current trade remedy regime is unable to meet this challenge as it can only apply duties on the basis of direct imports. To ensure the effectiveness of its existing measures, the Commission is assessing whether it should introduce a “melt and poured rule” to allow the Commission “to act against the country where the metal was originally melted, regardless of the place of subsequent transformation and the origin of the good as determined by the traditional non-preferential rules of origin.”

Objective

The objective of the Order is to respond to the acts, policies and practices of the Government of China which are contrary to Canadian values that adversely affect, or lead directly or indirectly to adverse effects on, the trade in goods of Canada. To help level the playing field for Canadian steel and aluminum workers and allow Canada’s steel and aluminum industry to compete by limiting imports into Canada of steel products that are melted and poured or aluminum products that are smelt and cast in China, regardless of country of export, except for the U.S.

Description

The Steel Goods and Aluminum Goods Surtax Order (the Order) imposes an additional surtax of 25% on steel that is melted and poured or aluminum that is smelted and cast in China, regardless of the country of export, except for the U.S. The surtax will apply to imports of steel and aluminum into Canada unless importers provide evidence to the Canada Border Services Agency (CBSA) demonstrating that the subject steel or aluminum goods do not contain steel that was melted and poured or aluminum that was smelted and cast in China.

Steel will be considered melted and poured in China if any of the raw steel contained in a good is first produced in a liquid state and poured into its first solid state in China. Aluminum will be considered smelt and cast in China if it is where the largest or second-largest volume of primary aluminum in a good is produced or is the country where the aluminum was most recently cast.

The scope of steel and aluminum products covered is the same as the China Surtax Order (2024) and applies to goods classified under Chapter 99 of the List of Tariff Provisions that are also classifiable under the tariff items in the schedule of this order. Chapter 99 waives customs duties on certain commercial importations, such as goods for specific uses (e.g. religious goods) and in select situations to assist a small number of complex manufacturing activities.

To claim an exemption from the surtax, importers will be required to provide evidence to demonstrate that the country of melt and pour for steel or smelt and cast for aluminum included in the good is not China. Importers can demonstrate this by providing a certificate to the CBSA indicating the country of melt and pour or smelt and cast. Until September 22, 2025, importers may also provide a commercial invoice as evidence of the country of melt and pour or smelt and cast. If importers are unable to provide evidence demonstrating that China is not the country of melt and pour or the country of smelt and cast, the goods will be deemed to include Chinese steel or aluminum, and the surtax will apply.

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. While this surtax applies in addition to certain applicable duties, including anti-dumping or countervailing duties, it does not apply in addition to Canada’s existing tariffs on steel and aluminum products from China.

The surtax will apply to covered products that are within the specified quota levels of the TRQ. However, no other surtaxes imposed under the Customs Tariff, including this measure, may be applied to goods that are above the specified quota levels of the TRQ and, therefore, subject to a 50% surtax, based on the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods and the Order Amending the Import Control List (2025-1) at the time of implementation.

Goods that are in transit to Canada on or before the surtax comes into force are excluded, as are imports that have a cumulative value for duty of less than $5,000 (i.e. where all goods accounted for on the same accounting document have a value for duty of less than $5,000).

Additionally, imports defined as “casual goods,” as defined in section 2 of the Persons Authorized to Account for Casual Goods Regulations and imports that are classified under a tariff item of Chapter 98 of the List of Tariff Provisions (even if the goods are otherwise classifiable under a tariff item set out in the schedule) are not subject to the surtax. Chapter 98 waives customs duties on certain non-commercial importations, such as travellers’ exemptions.

Imports from the U.S. have been excluded from this measure due to the existing 25% surtax in place on imports of steel and aluminum products from the U.S.

Regulatory development

Consultation

On March 22, 2025, the Government launched consultations on potential trade measures to prevent diversion of steel products into Canada, seeking views by April 21, 2025. The consultations were not specific to the country of melt and pour or smelt and cast nor any other specific trade measure.

The Government received close to 80 submissions from a variety of stakeholders, including businesses, industry associations, unions and provincial governments. Stakeholders in the steel industry were highly supportive of a surtax, and specified support for a measure targeting goods melted and poured in China or countries sanctioned under the Special Economic Measures Act. Other stakeholders raised concerns that the surtax would increase the cost and/or reduce the availability of the goods they import, particularly for goods where there are no domestic alternatives. Remissions may be considered in the future to allow importers to request relief from these surtaxes in certain limited instances.

All comments have been taken into consideration in determining the appropriate course of action, while still ensuring that the objective of addressing the adverse effects on the Canadian industry caused by Chinese steel and aluminum are addressed. To provide importers time to adapt to the new requirements, all goods in-transit at the time the surtax comes into force will be exempt from the surtax. Likewise, imports with a total value for duty below $5,000 will also be exempted from the application of the surtax. This is intended to reduce the added burden on importers by aligning with an exemption in place for steel imported under Canada’s Steel Import Monitoring Program, administered by Global Affairs Canada, whereby country of melt and pour information is not required to be provided for imports with a total value for duty below $5,000.

While these consultations did not seek feedback on imports of aluminum, the Aluminum Association of Canada separately expressed support for a measure to address concerns over aluminum smelt and cast in non-market economic conditions, such as in China.

The Government also held a public consultation from May 21 to June 28, 2024, to seek stakeholders’ input on whether aluminum importers should be required to report and allow publication of the country of smelt and cast details as part of Canada’s Aluminum Import Monitoring Program. Participants included a wide range of industry actors (i.e. producers, manufacturers, importers, associations, unions, provincial governments and international partners). A majority of respondents expressed support for the collection and publication of data on the country of smelt and cast noting increased transparency as a benefit. However, some respondents also noted concerns with the administrative burden and supply chain disruptions.

The Government will continue to engage affected stakeholder groups as this measure is implemented. This includes discussion with stakeholders through the Steel and Aluminum Trade Monitoring Task Forces, who meet regularly to closely monitor trade and market trends to support government decision-making. The Order will be reviewed periodically to account for developments in the market, ongoing trade discussions with other countries, and to assess impacts and determine whether adjustments are appropriate.

Modern treaty obligations and Indigenous engagement and consultation

Following the completion of the 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 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, or by the Minister of State (US Trade) specifically in relation to Canada-US trade, 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.

Other instruments were considered but were not found suitable to address the broad range of pervasive Chinese non-market policies and practices, and the resulting spread of trade distortions into global supply chains in a timely manner.

Regulatory analysis

Benefits and costs

Baseline scenario

In the absence of the application of the surtax, the spreading of non-market driven overcapacity will continue to distort steel and aluminum global value chains, allowing artificially low-priced steel and aluminum from China to be exported to third countries for incorporation into products that are then exported to Canada. This activity is expected to accelerate in light of the imposition of border measures by other countries, namely the imposition of 50% surtaxes on imports of steel and aluminum by the U.S., which will lead to goods containing steel melted and poured or aluminum smelt and cast in China to be diverted from the U.S. into alternative markets, such as Canada. Combined, this will adversely impact Canadian steel and aluminum producers and adversely affect the long-term viability of these Canadian industries.

Regulatory scenario

Canadian importers of steel and aluminum goods that were melted and poured or smelt and cast in China will be charged a surtax of 25% of the value for duty of those importations. This will increase the costs of importing goods containing steel and aluminum produced in China under non-market economic conditions and make goods from market-driven sources, including domestically produced ones, more comparably priced and competitive.

Benefits

This surtax is intended to level the playing field for Canadian steel and aluminum producers and workers, and offset the negative effects of persistent global overcapacity caused by non-market practices by China, such as pervasive subsidization and insufficient or non-existent labour and environmental standards that are contrary to Canadian values. Steel and aluminum goods produced in third countries with artificially low-priced steel and aluminum inputs from China are not subject to normal market conditions and further drive persistent, structural overcapacity in these sectors. The surtax would protect Canadian producers from artificially low-priced imports that threaten the long-term viability of the Canadian steel and aluminum industries.

The steel and aluminum industries are important sectors to the Canadian economy. The steel industry supports over 23 000 high-skill and high-wage jobs, and contributed $3 billion to Canada’s gross domestic product (GDP) 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% in Quebec.

The Canadian primary aluminum industry ranks fourth in the world following China, India and Russia. The sector contributes $4.3 billion to Canada’s GDP and supports over 9 500 jobs, with an annual production of about 3.3 million tonnes of primary aluminum. There are three producers of primary aluminum in Canada, which operate nine plants: eight in Quebec and one in British Columbia.

Furthermore, imports of steel and aluminum that include inputs from countries where non-market policies and practices result in lacking environmental protection result in costs that have not been internalized by the producer of the good. Rather, these costs are borne by those that suffer from the related environmental damages, such as climate change impacts. This surtax will limit Canada’s indirect contributions to global climate change-induced costs by limiting imports from such countries. For example, the average CO2 emissions intensity for steel production (PDF) in China is about 1.9 tons of CO2 per ton produced versus approximately 1.2 tons in Canada. The average CO2 emissions intensity for aluminum production (PDF) in China is about 12.5 of CO2 per ton produced versus approximately 2 tons in Canada.

Costs

The surtax increases the cost of steel and aluminum imports melted and poured or smelt and cast in China for Canadian importers. Consequently, importers may seek out products not melted and poured or smelt and cast in China, or continue purchasing them, but pass the incremental importation costs, in whole or in part, onto their Canadian clients, including downstream manufacturers that use steel and aluminum as inputs or consumers of finished products.

Based on the OECD trade in value-added database, it is estimated that the surtax would affect $224 million worth of steel imports and $36 million worth of aluminum imports based on 2024 import statistics, which could incur an estimated cost on importers of up to $56 million for steel and $9 million for aluminum. However, these estimates assume no changes to 2024 import patterns and, therefore, may overstate the revenue implications given the likely shifts in trade patterns, including the possibility for importers to source from domestic producers.

Consumer impacts as a result of price increases are also expected, as supply chains adjust to the new trade environment. In the short term, importers may pass the surtax to domestic consumers, who may then choose to seek local or imported alternatives, which could result in higher prices (consumer costs) of steel and aluminum products. Increased costs could initially approach the full value of the surtax applied to imports (e.g. 25%), depending on how much of the total cost of the finished good the steel and aluminum input represents, as well as the degree to which these costs are passed along to consumers or borne by producers. However, in the long term, this is likely to decrease as steel and aluminum is sourced from companies that do not use steel melted and poured or aluminum smelt and cast in China.

The surtaxes based on country of melt and pour and smelt and cast will apply alongside the existing TRQ on steel, both to imports within and outside of the quota. To ease the burden on importers and, unless specified otherwise in the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods and the Order Amending the Import Control List (2025-1), no other surtaxes imposed under the Customs Tariff, including this measure, may be applied to goods exceeding the specified quota levels of the TRQ and therefore subject to a 50% surtax.

The long-term scope and nature of impacts will depend on many variables, including the overall demand for steel and aluminum, the availability of products produced by alternate sources, including in Canada, and the extent to which importers absorb the cost of the surtaxes.

Small business lens

Analysis under the small business lens determined that the measure would impose administrative requirements on Canadian small businesses; however, these are expected to be limited. Many importers already provide documentation of the country of melt and pour for steel products. Importers of aluminum products may face minor costs associated with the time required to find the country of smelt and cast information. Small businesses that use materials containing steel and/or aluminum will also face reduced options for suppliers or be required to pay higher prices.

To reduce the burden placed on small businesses importing small amounts of steel and aluminum, goods cumulatively valued at under $5,000 are excluded from the application of the surtax. 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 section 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 Order is exempted from the requirement to offset burden and titles under the rule.

The Order impose some administrative burden on steel and aluminum importers. Importers of applicable goods would need to provide documents demonstrating that the goods being imported do not contain steel melted and poured or aluminum smelt and cast in China. This documentation is already provided for steel imports.

Regulatory cooperation and alignment

Canada’s key trading partners have identified similar concerns and are taking, or are considering taking, steps to protect their steel and aluminum markets. For example, U.S. steel and aluminum tariffs are intended, in part, to address the effects of Chinese overcapacity. The European Commission is assessing the introduction of a “melt and poured rule” to allow the Commission “to act against the country where the metal was originally melted, regardless of the place of subsequent transformation and the origin of the good as determined by the traditional non-preferential rules of origin.”

Effects on the environment

Limiting steel and aluminum imports melted and poured or smelt and cast in China, which are among the most carbon-intensive in the world, is expected to have positive environmental impacts, as these steel and aluminum 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 (PDF) in China is about 1.9 tons of CO2 per ton produced versus approximately 1.2 tons in Canada. The average CO2 emissions intensity for aluminum production (PDF) in China is about 12.5 of CO2 per ton produced, versus approximately 2 tons in Canada. Chinese steel has also been estimated to have a carbon intensity of more than double that of the U.S. or Mexico, while Chinese aluminum production is among the most carbon-intensive in the world. The ultimate impact will depend on the degree to which the surtax alters trade patterns and the relative carbon intensity of alternative sources.

In accordance with the Cabinet Directive on Strategic Environmental and Economic Assessment (SEEA Directive), a preliminary scan concluded that a strategic environmental and economic assessment is not required.

Gender-based analysis plus

No impacts based on gender and other identity factors have been identified for this Order.

Implementation, compliance and enforcement, and service standards

This Order will come into force on July 31, 2025, or the day on which it is registered, whichever is later. Consistent with similar previous measures, goods that are in transit to Canada on that date will be exempted from the surtax.

The Order will be implemented by the CBSA, as the administrator of the Customs Tariff. The CBSA will release a Customs Notice to inform the importing community of issues related to the administration of the tariffs. Bulletins to internal staff will also be issued to support the implementation of the measure. Additional details on evidence required to demonstrate the country of melt and pour or country of smelt and cast for importers will be included in the Customs Notice, based on the requirements established in the Order.

Contact

Marie-Hélène Cantin
Director
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Email: tariff-tarif@fin.gc.ca