Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods: SOR/2025-266
Canada Gazette, Part II, Volume 159, Number 27
Registration
SOR/2025-266 December 11, 2025
CUSTOMS TARIFF
P.C. 2025-916 December 11, 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 Amending the 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 Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods
Amendments
1 The Order Imposing a Surtax on the Importation of Certain Steel Goods footnote 1 is amended by adding the following after section 1:
Quarterly period
1.1 For the purposes of subsections 2(1) and 2.1(1), the following periods are quarterly periods:
- (a) the period beginning on December 26, 2025 and ending on March 25, 2026; and
- (b) the period beginning on March 26, 2026 and ending on June 27, 2026.
2 Subsections 2(1) to (2) of the Order are replaced by the following:
Surtax — countries with no trade agreement
2 (1) Subject to section 3, goods that are classified under a tariff classification number set out in column 4 of Schedule 1 and do not originate in a country listed in Schedule 3, as well as those that are otherwise classifiable under one of those tariff classification numbers 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
- (a) the quantity of goods that are classified under that tariff classification number and any other tariff classification number set out in the same item of Schedule 1 and that are imported during the same quarterly period exceeds the quarterly total set out in column 2; or
- (b) the quantity of goods that are classified under that tariff classification number and any other tariff classification number set out in the same item of Schedule 1, that originate in the same country and that are imported during the same quarterly period exceeds the quantity determined by multiplying the percentage set out in column 3 by the quarterly total set out in column 2.
3 Subsections 2.1(1) to (3) of the Order are replaced by the following:
Surtax — countries with trade agreement
2.1 (1) Subject to section 3, goods that are classified under a tariff classification number set out in column 4 of Schedule 2 and originate in a country listed in Schedule 3, as well as those that are otherwise classifiable under one of those tariff classification numbers 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
- (a) the quantity of goods that are classified under that tariff classification number and any other tariff classification number set out in the same item of Schedule 2 and that are imported during the same quarterly period exceeds the quarterly total set out in column 2; or
- (b) the quantity of goods that are classified under that tariff classification number and any other tariff classification number set out in the same item of Schedule 2, that originate in the same country and that are imported during the same quarterly period exceeds the quantity determined by multiplying the percentage set out in column 3 by the quarterly total set out in column 2.
4 Paragraphs 3(a) and (a.1) of the Order are replaced by the following:
- (a) goods referred to in subsection 2(1) that are in transit to Canada on or before June 27, 2025;
- (a.1) goods referred to in subsection 2.1(1) that are in transit to Canada on or before August 1, 2025;
5 Section 3.1 of the French version of the Order is replaced by the following:
Autres surtaxes
3.1 Malgré tout autre décret pris en vertu du Tarif des douanes, si une marchandise assujettie à une surtaxe au titre du présent décret est également assujettie à une autre surtaxe sous le régime du Tarif des douanes, seule la surtaxe établie par le présent décret s’applique à l’égard de la marchandise.
6 Schedules 1 and 2 to the Order are replaced by the Schedules 1 and 2 set out in the schedule to this Order.
Coming into Force
7 This Order comes into force on December 26, 2025, but if it is registered after that day, it comes into force on the day on which it is registered.
SCHEDULE
(Section 6)
SCHEDULE 1
(Subsection 2(1) and paragraph 3(d))
| Item | Column 1 Class of Goods |
Column 2 Quarterly Total |
Column 3 Percentage per Country |
Column 4 Tariff Classification Number |
|---|---|---|---|---|
| 1 | Carbon Steel Ingots | 5.6 | 97% |
|
| 2 | Steel Billets and Blooms | 30 472.5 | 70% |
|
| 3 | Hot-Rolled Sheet | 2 370.5 | 41% |
|
| 4 | Floor Plate | 2.4 | 98% | 7208.40.00.00 |
| 5 | Steel Plate | 5 201.2 | 36% |
|
| 6 | Cold-Rolled Sheet | 6 164.4 | 92% |
|
| 7 | Tin | 382.9 | 84% |
|
| 8 | Coated Steel Sheet | 18 732.8 | 37% |
|
| 9 | Pre-Painted | 3 466.0 | 58% |
|
| 10 | Rebar | 13 445.1 | 29% |
|
| 11 | Hot-Rolled Bar | 7 281.7 | 39% |
|
| 12 | Wire Rod | 1 571.7 | 45% |
|
| 13 | Cold Finished Bars | 214.4 | 54% |
|
| 14 | Structural Steel | 4 674.2 | 55% |
|
| 15 | Steel Wire | 4 114.6 | 70% |
|
| 16 | Stainless Steel Ingots | 0.1 | 75% | 7218.10.00.00 |
| 17 | Stainless Steel Billets and Blooms | 892.9 | 99% |
|
| 18 | Line Pipe | 2 472.0 | 59% |
|
| 19 | Oil Country Tubular Goods | 3 126.5 | 53% |
|
| 20 | Standard Pipe | 10 369.2 | 21% |
|
| 21 | Large Diameter Line Pipe | 927.9 | 70% |
|
| 22 | Piling Pipe | 2 689.8 | 92% |
|
| 23 | Hollow Structural Sections | 2 398.5 | 40% |
|
SCHEDULE 2
(Subsection 2.1(1) and paragraph 3(d))
| Item | Column 1 Class of Goods |
Column 2 Quarterly Total |
Column 3 Percentage per Country |
Column 4 Tariff Classification Number |
|---|---|---|---|---|
| 1 | Carbon Steel Ingots | 92.4 | 77% |
|
| 2 | Steel Billets and Blooms | 17 649.4 | 40% |
|
| 3 | Hot-Rolled Sheet | 9 523.1 | 67% |
|
| 4 | Floor Plate | 33.4 | 66% | 7208.40.00.00 |
| 5 | Steel Plate | 54 354.9 | 30% |
|
| 6 | Cold-Rolled Sheet | 1 832.6 | 32% |
|
| 7 | Tin | 2 156.4 | 56% |
|
| 8 | Coated Steel Sheet | 31 128.2 | 25% |
|
| 9 | Pre-Painted | 23 763.8 | 90% |
|
| 10 | Rebar | 28 710.4 | 45% |
|
| 11 | Hot-Rolled Bar | 8 750.3 | 58% |
|
| 12 | Wire Rod | 16 514.8 | 59% |
|
| 13 | Cold Finished Bars | 6 559.3 | 39% |
|
| 14 | Structural Steel | 3 467.6 | 69% |
|
| 15 | Steel Wire | 7 370.1 | 24% |
|
| 16 | Stainless Steel Ingots | 1.1 | 83% | 7218.10.00.00 |
| 17 | Stainless Steel Billets and Blooms | 5.8 | 57% |
|
| 18 | Line Pipe | 6 248.6 | 45% |
|
| 19 | Oil Country Tubular Goods | 9 800.8 | 86% |
|
| 20 | Standard Pipe | 13 489.5 | 58% |
|
| 21 | Large Diameter Line Pipe | 10 693.5 | 76% |
|
| 22 | Piling Pipe | 0.8 | 77% |
|
| 23 | Hollow Structural Sections | 2 776.9 | 41% |
|
REGULATORY IMPACT ANALYSIS STATEMENT
(This statement is not part of the orders.)
Issues
Since March 2025, the United States (U.S.) has imposed restrictive trade measures on steel imports (i.e. global tariffs on steel articles and derivative products). In addition to the direct impact, these restrictive trade measures have created a significant risk of trade diversion of steel products into Canada. Finally, Canada and like-minded nations have long been concerned with the presence of global excess capacity in steel supply chains, caused by certain foreign governments and exporters using non-market policies and practices. Collectively, these three risks threaten to adversely affect the Canadian steel industry.
While Canada has implemented various response measures for steel products over the last year, these measures have not been sufficient to address the three risks referenced above.
Background
Canada, along with like-minded trading partners and the Organisation for Economic Co-operation and Development (OECD), has long noted concerns about structural overcapacity in the steel sector, the associated impacts on global trade, and the role that certain governmental non-market policies and practices can play in driving global overcapacity.
These non-market policies and practices include
- pervasive subsidization in various forms, including production subsidies, below-market financing and preferential tax treatment;
- concerning labour practices: evidence that producers have benefitted from insufficient labour standards, selective enforcement of labour rules, weak or non-existent worker representation and bargaining rights; and
- poor environmental performance: significantly higher emissions intensity production, mainly attributable to lax environmental standards and enforcement, and reliance on fossil fuel (particularly coal-fired) power generation.
These non-market policies and practices benefit certain foreign steel producers, leading to excess capacity, distorted price signals, significant levels of environmental damage with global implications, 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 certain steel goods, including Canada, the United States, the United Kingdom and the European Union.
Importantly, global excess capacity in the steel industry impacts both primary steel and steel derivative producers. Imports of steel derivatives, often made from primary steel produced under non-market conditions, compete with Canadian-made steel derivative products and depress demand for domestically produced steel. Moreover, due to the continued expansion of the list of derivative products subject to U.S. tariffs, countries from around the world are seeking alternative export markets for their derivative steel products. Canada is uniquely exposed to this trade diversion risk given the integration of Canada-U.S. steel markets.
According to the World Steel Association, the volume of exported steel that is embedded in steel-intensive goods — like derivative products — increased by 23% from 319 million metric tons (mmt) in 2013 to 392 mmt in 2023. The presence of steel produced through non-market policies and practices (whether steel mill products or derivatives) has been increasingly apparent to trade remedy investigating authorities. Between 2017 and 2025, global anti-dumping and countervailing duty cases implicating steel derivatives increased from 25 to 230, representing an 820% increase.
With respect to Canada specifically, Canada’s imports of steel derivative products have increased significantly from approximately $8 billion in 2021 to approximately $11 billion in 2024. The rise of indirect steel trade through unfairly traded steel derivative products impacts Canadian manufacturers of steel derivative products directly and Canadian steel producers indirectly through reduced domestic demand. Canada’s steel derivative production (covered under steel product manufacturing NAICS 3312) revenues fell from $7.5 billion in 2022 to $6.9 billion in 2023 (-8.5%). Furthermore, manufacturing shipments also declined by 8.5% year-over-year, despite a slight increase in value-added (from $2.1 billion to $2.3 billion).
The steel industry is an important sector for the Canadian economy, supports over 23 000 high-skilled, 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 five provinces. Approximately 75% of Canadian steelmaking capacity is situated in Ontario and another 15% is located in Quebec. Furthermore, Canada’s steel sector supports nation-building infrastructure projects, transportation, manufacturing, housing, and emerging sectors, such as artificial intelligence data centres. A strong steel sector is also key to national security, as it is an input into defence products and critical energy infrastructure.
Canadian primary steel producers, who have traditionally exported over half their output — of which over 90% goes to the United States — have seen exports fall 24% by volume (27% or $1.9 billion in value) year over year as of July 2025, reducing revenues and capacity utilization. Since the U.S. tariffs were imposed, employment in the steel sector has declined, with roughly 1 000 jobs lost to date, with another 1 000 jobs expected to be lost in the new year.
In terms of industry trends, domestic primary steel production fell significantly in the months following the U.S. tariffs (year-over-year declines of 30% for May 2025 and 22% for June 2025) but has seen a slight recovery in July and August (year-over-year declines of 4% for July 2025 and 8% for August 2025).
Recent actions
Since June 4, 2025, the United States has imposed a 50% global tariff on steel articles and derivative products pursuant to Section 232 of the Trade Expansion Act of 1962, up from 25% that has been applied since March 12, 2025. Additionally, in April 2025, the U.S. Department of Commerce outlined the regular “inclusion” process for public stakeholders to request additional steel derivative articles to be subject to Section 232 tariffs. As a result of this “inclusion” process, the United States has expanded the list of steel derivatives, including by adding 407 product categories in August 2025. Collectively, the recent U.S. trade actions have further disrupted market dynamics, closing off Canada’s primary steel export destination and creating risks of diversion of steel from third countries — that would otherwise have been exported to the U.S. market — into the Canadian market that harm Canadian producers. On June 19, 2025, the Government of Canada announced the implementation of trade measures on imports of steel mill products from non-free trade agreement (FTA) partners. These measures came into force on June 27, 2025, in the form of tariff-rate quotas (TRQs) whereby a 50% surtax was applied to imports of covered steel products (flat, long, pipe and tube, semi-finished, and stainless) that exceeded a quota equivalent to 100% of 2024 import volumes from non-FTA partners (see the Order Imposing a Surtax on the Importation of Certain Steel Goods; SOR/2025-148). These measures were intended to help stabilize the Canadian market in light of the U.S. tariffs and prevent harmful diversion of foreign steel from third countries into Canada while minimizing impacts on Canadian importers and downstream users.
On August 1, the Government of Canada further strengthened the TRQs for steel products. The measures included two key changes:
- First, the TRQ levels for steel products from countries without an FTA in force with Canada were reduced from 100% to 50% of 2024 import volumes; and
- Second, additional TRQs were introduced for steel products from non-Canada-United States-Mexico Agreement (CUSMA) FTA partners, that allowed imports equivalent to 100% of 2024 volumes to be imported tariff-free. Imports exceeding those volumes are subject to a 50% surtax.
The Government committed to reviewing the implementation of the TRQs periodically to ensure their continued appropriateness and effectiveness in light of evolving market circumstances. The reviews are supported by the government-industry Steel Trade Monitoring Task Force.
Of note, while imports of steel mill products have been on the decline, they have not declined to the same extent as export levels; specifically, imports of steel mill products from the world have declined 18% year-to-date (January–August), while exports of those same products have decreased 26% year-to-date.
Separate from the TRQ framework, to prevent steel trade diversion and address imports of steel produced through non-market policies and practices as well as the effect of other countries’ tariffs, the Government also applied
- surtaxes of 25% on certain steel goods imported from China (see the Order Amending the China Surtax Order (2024), in force as of October 22, 2024);
- surtaxes of 25% on certain steel goods imported from the United States (see the United States Surtax Order (Steel and Aluminum 2025), in force as of March 13, 2025; and then amended by the Order Amending the United States Surtax Order (2025-1) and the United States Surtax Order (Steel and Aluminum 2025), in force as of April 9, 2025); and
- global surtaxes of 25% on certain steel goods that contain steel melted and poured in China (see the Steel Goods and Aluminum Goods Surtax Order, in force as of July 31, 2025) – referred to herein as the “Country of Melt Surtax.”
Generally speaking, the product scope of these surtaxes is focused on steel mill products (e.g. primary iron and steel, flat-rolled iron and steel, long steel, stainless steel, non-stainless alloy, iron and steel tubes and pipes), rather than steel derivative products.
Announcement of November 26, 2025
On November 26, 2025, the Prime Minister announced additional measures to support the steel industry. This includes trade measures to address foreign steel imports entering the Canadian market by
- reducing the TRQ levels for steel products from countries without an FTA in force with Canada from 50% to 20% of 2024 volumes;
- reducing the TRQ levels for steel products from non-CUSMA FTA partners from 100% to 75% of 2024 volumes;
- applying a new 25% tariff applicable to imports from all countries on the full value of certain products made with steel, also known as steel derivative products, such as wind towers, prefabricated buildings, fasteners, and wires;
- extending the temporary horizontal remission of counter-tariffs on U.S. steel used for manufacturing, processing, food and beverage packaging or agricultural production, such that it expires January 31, 2026, with the continued exception of goods used for the manufacturing of automobiles, aerospace goods and related parts; and
- extending the horizontal remission for goods used for public health, health care, public safety and national security purposes.
For clarity, derivative products are generally understood to mean goods that have the primary material (in this case, steel) as an input and that may be modified, formed, or assembled further in comparison to a primary steel product. The list of certain steel derivative products is defined through a list of Harmonized System (HS) codes set out in a Schedule to the Order.
Relevant authorities
In Canada, the authorities to impose these trade measures are set out in the Customs Tariff. Specifically, section 53 of 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 the application of trade measures when they take the form of a TRQ, the Governor in Council is also authorized under subsection 5(6) of the Export and Import Permits Act to add goods subject to those trade measures to the Import Control List (ICL), established under subsection 5(1) of 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 (GAC) on behalf of the Minister of Foreign Affairs under the Act.
Objective
To protect Canada, and in particular the Canadian steel industry, from adverse impacts relating to the U.S. Section 232 tariffs on steel imports, global excess capacity caused by non-market policies and practices, and the risk of trade diversion.
Description
Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods
The Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Amending Surtax Order) amends the Order Imposing a Surtax on the Importation of Certain Steel Goods in the following manner:
- Reduction of TRQ levels for imports originating from non-FTA partners: for imports from countries that do not have an FTA in force with Canada, the levels for tariff-free imports will be reduced to 20% from 50% of 2024 levels;
- Reduction of TRQ levels for imports originating from non-CUSMA FTA partners: for imports from non-CUSMA countries with an FTA in force with Canada, the levels for tariff-free imports will be reduced to 75% from 100% of 2024 levels;
- Technical changes to the scope of goods subject to the TRQs to ensure that products are properly categorized according to their characteristics: 22 tariff classification numbers are reclassified between the line pipe class of goods and large diameter line pipe class of goods; 5 tariff classification numbers are reclassified from the line pipe and large diameter line pipe classes of goods to the standard pipe class of goods; and 1 tariff classification number is removed from the structural steel class of goods to avoid overlap with the surtax on steel derivative products; and
- Technical amendments to provide clarity concerning the start and end dates of remaining quarterly periods.
To enable the administration of the TRQs, the Order Amending the Import Control List (2025-2) amends item 82 of the ICL to make consequential changes. Item 82 of the ICL refers to certain steel goods that are subject to the Amending Surtax Order. Goods controlled under item 82 of the ICL require a shipment-specific import permit to benefit from quotas. Importers must obtain a shipment-specific import permit to be exempt from the 50% surtax. Once the quota amounts are reached (quantities indicated in Schedules 1 and 2 of the Amending Surtax Order), shipment-specific import permits will not be issued. After that point, steel goods can still be imported using general import permits, but they will be subject to the 50% surtax.
The ICL is currently being amended to update the reference for subject steel goods under item 82 to the current Amending Surtax Order. This is to reflect the changes in product scope. Specifically, the removal of one tariff classification from the TRQs, as it is now subject to the Steel Derivative Goods Surtax Order and the reclassification of some tariff classification numbers between the standard pipe, line pipe and large diameter line pipe product categories. The ICL amendment further ensures that shipment specific permits are only issued with quantities up to the reduced quota levels.
Steel Derivative Goods Surtax Order
The Steel Derivative Goods Surtax Order (herein referred to as the “derivative surtax”) imposes a global surtax of 25% on certain steel derivative products that fall under a tariff classification set out in Schedule 1 to the Order. General categories of products covered include prefabricated buildings, wire, cables, chains, and fasteners.
When applied, the derivative surtax will be calculated on the basis of the value for duty of the imported goods. It applies in addition to any other applicable duties owing, including customs duties, anti-dumping or countervailing duties, and taxes that may be applicable.
There are several categories of goods that are not subject to the surtax. First, this Order contains exemptions clarifying that other surtaxes imposed by the Canadian government do not “stack” with surtaxes imposed on steel derivatives. Specifically, this Order stipulates that goods subject to a surtax under the (a) China Surtax Order (2024), (b) Steel Goods and Aluminum Goods Surtax Order, (c) United States Surtax Order (Steel and Aluminum 2025), or (d) Order Imposing a Surtax on the Importation of Certain Steel Goods, will not be subject to the derivative surtax.
Second, 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. Examples include souvenirs brought while travelling, electronics for personal use, and personal clothing taken out of Canada and brought back.
Third, goods for use in the manufacturing of motor vehicles or aerospace goods, and their related parts, are not subject to the surtax when imported before July 1, 2026. This will serve to support the competitiveness of these sectors and is consistent with the spirit of the Prime Minister’s November 26 announcement, when the government announced it would continue providing horizontal remission of counter-tariffs on U.S. goods related to the manufacturing of these aforementioned goods beyond January 31, 2026.
Fourth, wind towers classified under tariff item 7308.20.00 and imported for installation in energy projects located west of the Ontario-Manitoba border are not subject to the surtax, reflecting current domestic production capacity.
Finally, derivative goods that are in transit to Canada on or before the surtax comes into force are excluded.
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, steel derivative products, or 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 mill producers and certain steel derivative producers expressed support for protective trade measures, while certain downstream companies expressed concerns over the 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 the 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.
On June 19, 2025, the Government also established a government-industry Steel Trade Monitoring Task Force to closely monitor trade and market trends to support government decision-making. Canadian steel mill producers, as part of the Task Force, have requested adjustments to the TRQs as implemented on June 27, 2025, to better stabilize the domestic steel market and mitigate risks of disruptions caused by U.S. tariffs. This included expanding the scope of country coverage, reducing overall TRQ volumes, and certain TRQ administrative and design changes. Changes were made to the TRQs effective on August 1, 2025, taking into account these comments. The latest changes to the TRQs, effective on December 26, 2025, are adopted further to evolving market conditions and have been informed through discussions with Canadian steel producers.
In regard to steel derivative products, the surtax and the product scope were established pursuant to comments received from Canadian manufacturers of those products, either as part of the steel trade diversion consultations, the Task Force, or submissions sent by stakeholders on a proactive basis to the Government outside of formal consultation processes. In particular, they noted the urgency for the government to take action to address their loss of market access to the United States and trade diversion of foreign products in the Canadian market due to the U.S. tariffs. Canadian steel mill producers support the surtax on certain steel derivative products given the use of Canadian steel by Canadian manufacturers of derivative products. The Government accordingly determined that a 25% surtax would be necessary to achieve its objectives.
All comments have been taken into consideration in determining the appropriate course of action. For example, in response to concerns around the high cost of freight for transporting Canadian steel to regional markets, the Prime Minister’s announcement on November 26, 2025, stated that the Government will provide funds to Canadian National and Canadian Pacific Kansas City railways to enable a 50% freight rate discount on interprovincial steel and lumber shipments within Canada, beginning in spring 2026.
The Government will continue to engage affected stakeholder groups and partners (e.g. provinces and territories, municipalities, unions, and industry associations) as these new measures are implemented, and review them on an ongoing basis to ensure they reflect developments in the market, ongoing trade discussions with other countries, and domestic production capabilities. Further adjustments, including potential extensions or terminations, could be made when warranted.
Indigenous engagement, consultation and modern treaty obligations
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 Amending Surtax Order or Steel Derivative Goods Surtax Order.
Instrument choice
The Order Imposing a Surtax on the Importation of Certain Steel Goods and the Steel Derivative Goods Surtax Order are implemented under subsection 53(2) of the Customs Tariff. This provision 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.
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.
Other instruments were considered but were deemed not appropriate to address the effect of U.S. tariffs, trade diversion and exported global excess capacity on the steel sector in a timely manner.
Benefits and costs
Baseline scenario
In the baseline scenario, the TRQs apply to steel imports from all countries, with the exception of the United States and Mexico. Surtaxes are applied to imports exceeding 50% of 2024 volumes from non-FTA partner countries, and exceeding 100% of 2024 volumes from non-CUSMA countries with FTAs in force with Canada.
New market evidence and stakeholder feedback have indicated that this level of protection would not be sufficient to prevent significant damage to the domestic steel manufacturing sector. As mentioned in the “Background” section, the year-over-year decline in exports of steel mill products subject to the TRQ measure continues to exceed the decline in imports of the same goods. In the absence of a further reduction to the TRQs and the new derivative surtax, the spreading of non-market driven overcapacity will continue to distort steel global value chains, allowing goods containing artificially low-priced steel from around the world (particularly from non-market economies) to be exported to Canada, unfairly competing with Canadian steel derivative products.
The U.S. imposition of 50% tariffs on imports of steel articles and derivative products — particularly as the product inclusion list continues to grow — continues to pose risks for foreign steel, in particular unfairly traded products produced through non-market policies and practices, to be diverted from the U.S. into alternative markets, notably Canada. Combined, this will adversely impact the Canadian steel industry (both upstream and downstream) and adversely affect the long-term viability of these Canadian industries.
Regulatory scenario
With the changes made by these regulations on a forward basis, the TRQ levels will be reduced to 20% of 2024 volumes from non-FTA partner countries, and to 75% of 2024 volumes from non-CUSMA countries with FTAs in force with Canada. The reduction in surtax-free imports will benefit Canadian steel producers and contribute to their sustainable operations through current turbulent market conditions, largely caused by non-market policies and practices and U.S. tariffs. Based on 2024 import volumes, the reduction of the TRQs will generate approximately $1.4 billion in potential new market openings that Canadian producers could fill.
Additionally, Canadian importers of steel derivative goods covering $10.6 billion in 2024 imports will be charged a surtax of 25% of the value for duty of those importations, regardless of the country of export.
While limitations to access the U.S. market will remain as they do in the baseline, it is expected that these latest measures will result in a greater overall average cost for imported steel products in Canada, notwithstanding the possible granting of remissions in cases of short supply, supporting the business environment for domestic producers.
Impacts
The latest changes to the TRQs are adopted in response to evolving market conditions to further address the risks to Canada described above, and in particular the risks to Canada’s steel industry and workers. Further adjustments may be made based on market dynamics and the outcomes of future review processes.
The Government expects additional administrative burden due to updates to the New Export Import Control System (NEICS) and complexities as a result of these amendments. More specifically, the further reduction of levels for surtax-free imports originating from non-FTA and non-CUSMA FTA partners will reduce the number of permits that are expected to be issued but the number of permit applications will likely remain the same. There will also likely be an increase in the number of inquiries that will be received from importers and trade partners, including those seeking to understand the changes to the TRQs.
For businesses wishing to import steel goods surtax-free under the TRQs, there are costs of up to $31 to obtain each 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 GAC.
For the amended TRQs, based on the 2024 volume and value of covered products, an incremental 727 000 tonnes of steel product imported from non-FTA partner countries could be subject to the surtax, for a total estimated surtax cost of $427 million on an annual basis for importers. Likewise, an incremental 340 000 tonnes of imported steel product from non-CUSMA FTA partner countries could be subject to the surtax, for a total estimated incremental surtax cost of $271 million on an annual basis for importers. However, these estimates likely overstate the impacts of the surtax.
Based on the TRQ amendments, it is estimated that roughly 49 000 permits could be issued over a year for a total estimated cost to business of $1.52 million. The surtax savings to importers will far outweigh the fees associated with obtaining 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 further costs to adjust their business and supply chains based on these amendments, as they search for alternatives at a lower cost than the surtax-inclusive cost of their current practices.
The derivative surtax will apply to $10.6 billion in products based on 2024 import values. Approximately 20% of these imports originated from FTA partners aside from the U.S., 36% was imported from non-FTA partners, and 44% was imported from the United States. This would nominally result in up to $2.65 billion in additional revenue, without considering any impacts that the surtax would have on import volume, remissions granted, or the availability of programs such as the Duty Drawback Program administered by the Canada Border Services Agency (CBSA). Imports of U.S. steel derivatives that are already subject to a 25% surtax pursuant to the United States Surtax Order (Steel and Aluminum 2025) are not subject to the derivative surtax, as outlined in paragraph 2(a) of the Steel Derivative Goods Surtax Order.
Finally, there are minor costs for GAC and the Department of Finance associated with implementing the Orders (e.g. reallocating FTEs internally), with more significant implementation costs for the CBSA.
Small business lens
Analysis under the small business lens determined that the changes to the TRQs result in no change to administrative and compliance requirements on Canadian businesses. These changes do not change the administrative processes themselves, and it is expected that businesses will continue to seek permits to leverage opportunities to access quotas. No additional flexibility is being provided to small businesses, as this measure maintains current administrative requirements.
The Steel Derivative Goods Surtax Order imposes a global surtax on certain steel products. This surtax is calculated using values stated on customs declaration forms and does not introduce new administrative or compliance obligations on importers. Though the value of the surtax is extra the scope of the small business lens, it is acknowledged that the surtax would impact small businesses.
One-for-one rule
The one-for-one rule has been applied to the three instruments included in this package.
Administrative burden on business resulting from the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (Surtax Amending Order) and the Order Amending the Import Control List (2025-1) would remain the same.
The removal of one tariff classification number from the scope of the measure is expected to reduce the number of applications for permits for this classification number. For the remaining items, even though the quota available is reduced, the expected administrative burden will remain the same because the process for obtaining permits is not changing and it is expected that businesses will continue to seek permits to leverage opportunities to access quotas. The surtax measures, when introduced, were exempted from the requirement to offset burden under the one-for-one rule.
The Steel Derivative Goods Surtax Order imposes a global surtax on certain steel products. This surtax is calculated using values stated on customs declaration forms and does not introduce new administrative obligations on importers. Duties and taxes (including surtaxes) do not meet the definition of administrative burden in the Red Tape Reduction Act and are not subject to the offset requirement under the rule.
Regulatory cooperation and alignment
The United States, a key trading partner, has identified similar concerns as Canada with respect to global excess capacity and has taken steps to protect its steel market, including by expanding the scope of derivative products subject to Section 232 tariffs. In response to continued unfair trading practices and the negative effects of global overcapacity, the European Commission, in October 2025, proposed a tightened TRQ framework and a new melt and pour reporting requirement. The proposal replaces its existing steel safeguard measures set to expire in June 2026. Canada will engage as needed with other international partners who may be affected by these issues.
Effects on the environment
Limiting the 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 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 this proposal.
Implementation, compliance and enforcement, and service standards
The Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods, the Order Amending the Import Control List (2025-2), and the Steel Derivative Goods Surtax Order will come into force on December 26, 2025.
Subject to any amendments, the Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods will be repealed on June 27, 2026, the first anniversary of the day on which the original Order came into force.
The orders will be reviewed on an ongoing basis to account for market developments, ongoing trade discussions with other countries, and to assess impacts. Further adjustments, including potential extensions or terminations, may be made when warranted.
The CBSA is responsible for administering Customs Tariff legislation and regulations; GAC is responsible for administering the Export and Import Permits Act, including through the issuance of shipment-specific import permits allowing for products to be imported surtax-free. Importations made without the applicable shipment-specific import permit under item 82 of the Import Control List are subject to the 50% surtax.
The CBSA and GAC will revise their public notices to inform importers of the change resulting from these amendments.
Contact
Scott Winter
Director General
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Email: scott.winter@fin.gc.ca