Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods: SOR/2026-119

Canada Gazette, Part II, Volume 160, Number 13

Registration
SOR/2026-119 June 12, 2026

CUSTOMS TARIFF

P.C. 2026-593 June 12, 2026

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 paragraph 53(2)(d) of the Customs Tariff footnote a.

Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods

Amendments

1 Paragraphs 1.1(a) and (b) of the Order Imposing a Surtax on the Importation of Certain Steel Goods footnote 1 are replaced by the following:

2 Section 4 of the Order is replaced by the following:

4 This Order is repealed on the second anniversary of the day on which it comes into force.

3 (1) The portion of item 3 of Schedule 1 to the Order in column 2 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)
3 2 366.7

(2) Item 3 of Schedule 1 to the Order is amended by deleting tariff classification numbers “7225.50.00.10”, “7225.50.00.20”, “7225.50.00.30” and “7225.50.00.40” in column 4.

4 (1) The portion of item 6 of Schedule 1 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
6 6 168.4 56%

(2) Item 6 of Schedule 1 to the Order is amended by adding the following in numerical order in column 4:

5 The portion of item 11 of Schedule 1 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
11 5 886.1 42%
6 The portion of item 14 of Schedule 1 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
14 3 753.5 52%
7 The portion of item 17 of Schedule 1 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
17 32.9 87%
8 (1) The portion of item 3 of Schedule 2 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
3 8 569.8 71%

(2) Item 3 of Schedule 2 to the Order is amended by deleting tariff classification numbers “7225.50.00.10”, “7225.50.00.20”, “7225.50.00.30” and “7225.50.00.40” in column 4.

9 The portion of item 5 of Schedule 2 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
5 38 517.7 33%
10 (1) The portion of item 6 of Schedule 2 to the Order in columns 2 and 3 is replaced by the following:
Item

Column 2

Quarterly Total (tonnes)

Column 3

Percentage per Country
6 2 785.8 35%

(2) Item 6 of Schedule 2 to the Order is amended by adding the following in numerical order in column 4:

Coming into Force

11 (1) Subject to subsection (2), this Order comes into force at 24:00:00 Eastern Daylight Time on June 27, 2026.

(2) Section 2 comes into force at 24:00:00 Eastern Daylight Time on June 26, 2026.

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 on Canadian exporters, these restrictive trade measures have created a significant risk of trade diversion of steel products into Canada. In addition, 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 without sufficient consideration for labour rights and practices nor environmental consequences. Collectively, these risks threaten to adversely affect the Canadian steel industry.

Canada’s tariff-rate quotas (TRQs) for steel products over the last year are having their intended effect in stabilizing the domestic market and mitigating the risks identified above, supporting the case for their continuation for an additional year.

Background

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 5 provinces. Approximately 75 per cent of Canadian steelmaking capacity is situated in Ontario and another 15 per cent is located in Quebec. Furthermore, Canada’s steel sector supports nation-building infrastructure projects, transportation, manufacturing, housing, and emerging sectors, such as AI data centres. A strong steel sector is key to national security, in particular because it is an input into defence products and critical energy infrastructure.

Since June 4, 2025, the United States has imposed a 50 per cent global tariff on steel articles and derivative products pursuant to section 232 of the Trade Expansion Act of 1962, up from 25 per cent that has been applied since March 12, 2025. Collectively, 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.

Canadian primary steel producers, which have traditionally exported over half their output – over 90 per cent of which goes to the U.S. – have seen exports fall 40 per cent by volume year over year as of March 2026, according to Statistics Canada data. This contraction has reduced both 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.

Based on data from Commodities Research Unit (CRU) Intelligence and Market Insights, domestic primary steel production fell significantly in the months following the U.S. tariffs (year-over-year declines of 30 per cent for May 2025 and 22 per cent for June 2025) but has seen a slight recovery in July and August 2025 (year-over-year declines of 4 per cent for July 2025 and 8 per cent for August 2025). Since then, however, further recovery has not materialized and production has stabilized at a consistently lower level compared to the previous year (year-over-year declines of 14 per cent for November 2025, 16 per cent for December 2025, 12 per cent for January 2026 and 14 per cent for February 2026).

Recent actions

On June 19, 2025, the Government of Canada announced trade measures on imports of steel mill products from non-free trade agreement (FTA) partners, which came into force on June 27, 2025. The measures established tariff-rate quotas (TRQs) for which a 50 per cent surtax applies to imports of covered steel products (flat, long, pipe and tube, semi-finished, and stainless) exceeding quotas set at 100 per cent of 2024 import volumes from non-FTA partners (see the Order Imposing a Surtax on the Importation of Certain Steel Goods [SOR/2025-148]). The objective was to stabilize the domestic market in response to U.S. tariffs, limit diversion of third-country steel into Canada, and mitigate impacts on Canadian importers and downstream users.

On August 1, 2025, the Government strengthened these measures by (1) reducing TRQ levels for countries without an FTA, from 100 per cent to 50 per cent of 2024 import volumes; and (2) introducing new TRQs for non–Canada–United States–Mexico Agreement (CUSMA) FTA partners, allowing duty-free access up to 100 per cent of 2024 volumes, with a 50 per cent surtax applied above that threshold.

On December 26, 2025, the measures were further strengthened by (1) lowering TRQ levels for non-FTA partners from 50 per cent to 20 per cent of 2024 import volumes; and (2) reducing TRQ levels for non-CUSMA FTA partners from 100 per cent to 75 per cent of 2024 volumes.

In addition, on December 19, 2025, the Government issued the Surtax on Imports of Certain Steel Goods Remission Order, 2025, which provides remission of the 50 per cent surtax on subject steel goods that meet specific descriptions and for which there are no domestically produced alternatives, as well as in-transit goods. The remission order was subsequently amended on April 16, 2026, to expand the scope of goods eligible for remission.

The Government has 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. According to Statistics Canada data, global imports of steel mill products have declined 23 per cent year-over-year in the first quarter of 2025–2026. In contrast, exports of those products have decreased 59 per cent over the same period based on data published by the U.S. Department of Commerce.

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 the following:

These actions take place in a context in which Canada, along with like-minded trading partners and the Organisation for Economic Co-operation and Development (OECD),footnote 2 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 the following:

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.

Objective

To protect Canada, and in particular the Canadian steel industry, from adverse impacts relating to the U.S. section 232 tariffs, the resulting risk of trade diversion, and global excess capacity caused by non-market policies and practices.

Description

The Order Amending the Order Imposing a Surtax on the Importation of Certain Steel Goods (the Amending Surtax Order) amends the Order Imposing a Surtax on the Importation of Certain Steel Goods in the following manner:

Current quota levels for the TRQs remain unchanged at 20 per cent of 2024 volumes for countries without a FTA with Canada, and 75 per cent for non-CUSMA countries with an FTA in force with Canada. Imports exceeding quota limits will continue to be subject to a 50% tariff. Canada will also continue to exempt its CUSMA partners, the United States and Mexico, from the TRQs.

The Order Amending the Import Control List (2026-3) amends the repeal date for item 82 of the Import Control List (ICL) to the first anniversary of the entry into force (June 28, 2027) of the Order Amending the Import Control List (2026-3). Item 82 of the ICL refers to steel goods that are covered by the Order Imposing a Surtax on the Importation of Certain Steel Goods. 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 per cent 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 per cent surtax. The Order Amending the Import Control List (2026-3) also updates item 82 of the ICL to incorporate the reclassification of certain steel products and technical adjustments to quota volumes made by the Amending Surtax Order.

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 any measures. 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, had 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. In response, refinements to the TRQs were implemented effective August 1, 2025, and further strengthened on December 26, 2025, reflecting evolving market conditions and ongoing engagement with Canadian industry. These changes included progressively lowering TRQ thresholds - from 100 per cent to 50 per cent, and then to 20 per cent of 2024 import volumes for non-FTA partners, and from 100 per cent to 75 per cent for non-CUSMA FTA partners - to ensure the measure’s effectiveness in preventing imports that harm Canada’s steel sector and support market stability.

Since the December 26, 2025, adjustments, the Government has continued to engage stakeholders through the Steel Trade Monitoring Task Force and targeted consultations with industry and provincial and territorial governments. These consultations have informed the proposal to extend the existing TRQ measures by one year.

Domestic producers support the extension, noting that while the measures have helped limit trade diversion, they have not yet enabled a full recovery in production, capacity utilization, or market share, and remain necessary to support a sustainable recovery.

Importers and downstream users acknowledge the objective of preventing trade diversion but have raised concerns about the design and administration methodology of the TRQs. They have indicated that current quota levels and the first-come, first-served permit approach can contribute to supply constraints, cost uncertainty, and price volatility, and have called for greater predictability and administration more closely aligned with historical and commercial realities. Provincial and territorial governments have continued to raise concerns regarding regional supply and cost impacts. To help mitigate these concerns, the Government plans to explore a transition from a first-come, first-served TRQ system to one that incorporates an allocations-based permitting approach, with a view to developing it in consultation with industry and implementing it as early as autumn 2026.

A one-year extension balances predictability and flexibility by providing short-term certainty while allowing for reassessment as market conditions evolve. Maintaining current quota levels is intended to support stability and mitigate potential supply and cost pressures, while ongoing monitoring will ensure the measures remain time-limited and adaptable.

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 per cent freight rate discount on interprovincial steel and lumber shipments within Canada.

The Government will continue to engage affected stakeholder groups and partners (e.g. provinces and territories, municipalities, unions, and industry associations) as these 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 could be made when warranted, including potential changes to the administration of the measure.

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.

Instrument choice

The Order Imposing a Surtax on the Importation of Certain Steel Goods is 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. Import permits and certificates are issued by Global Affairs Canada (GAC) on behalf of the Minister of Foreign Affairs under the Act.

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 would expire on June 27, 2026, removing the TRQs on covered steel products. The resulting removal of surtaxes on steel imports exceeding the prescribed quotas may lead to significant market destabilization and severe adverse impacts on the Canadian steel industry due to the same factors which necessitated the implementation of these import measures when they were introduced.

Regulatory scenario

The TRQs currently apply to steel imports from all countries, with the exception of the United States and Mexico. Surtaxes are applied to imports exceeding 20 per cent of 2024 volumes from non-FTA partner countries, and exceeding 75 per cent of 2024 volumes from non-CUSMA countries with FTAs in force with Canada. These amendments will allow the extension of the TRQs, which should benefit Canadian steel producers and contribute to their sustainable operations through current turbulent market conditions. The amendments also revise certain quota volumes based on updated 2024 Statistics Canada steel import data, resulting in minor statistical adjustments to four quotas and corresponding single-country limits.

Market evidence and stakeholder feedback have indicated that continuation of these import measures are necessary 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 an extension of the TRQs, Canada would be increasingly exposed to adverse impacts stemming from U.S. section 232 tariffs, global excess capacity driven by non-market policies and practices, and the associated risk of trade diversion.

Impacts

The steel TRQ measures are extended 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 will also continue to administer a surtax remission process for goods subject to TRQs to mitigate impacts of unintended consequences.

The Government does not expect additional administrative burden as a result of these amendments. 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.

Compared to a no surtax scenario, based on the 2024 volume and value of covered products, 1 936 000 tonnes of steel product imported from non-FTA partner countries could be subject to the surtax if imports were to exceed quota thresholds, for a notional maximum surtax cost of $1.1 billion on an annual basis for importers. Likewise, 340 000 tonnes of imported steel product from non-CUSMA FTA partner countries could be subject to the surtax, for a notional maximum surtax cost of $271 million on an annual basis for importers. However, these estimates represent an upper bound. In practice, imports are expected to remain largely within quota thresholds, limiting exposure to the surtax. Therefore, actual impacts are likely to be significantly lower, reflecting anticipated trade adjustments and remissions.

Based on the number of permits received to date, for the TRQ extension, it is estimated that roughly 15 000 permits could be issued over a year for a total estimated cost to businesses of $495,000. 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 per cent 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.

Small business lens

Analysis under the small business lens determined that the TRQs impose administrative and compliance requirements on Canadian small businesses. However, the continuation of the TRQs do not create additional requirements beyond those in place under the current approach. 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. No additional flexibility is being provided to small businesses, as this measure extends current administrative requirements.

One-for-one rule

The one-for-one rule applies, since there is an incremental increase in the administrative burden on business related to the permitting and remission processes for an additional year. However, duties and the associated administrative processes 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 proposal is exempted from the requirement to offset burden under the rule.

Regulatory cooperation and alignment

The U.S., 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 persistent unfair trading practices and global steel overcapacity, the European Union has moved to replace its existing safeguard measures (set to expire in June 2026) with a significantly more restrictive framework, including a revised tariff-rate quota (TRQ) system that reduces overall import quotas by roughly 47 per cent from 2024 levels and applies a 50 per cent duty on out-of-quota imports, alongside a new “melt and pour” requirement to enhance traceability of steel origin. In parallel, the United Kingdom has announced comparable measures as part of its 2026 steel strategy, including reducing tariff-free quota volumes by around 60 per cent and raising out-of-quota tariffs to 50 per cent. Canada will engage as needed with other international partners that 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 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 will come into force on June 27, 2026. The Order Amending the Import Control List (2026-3) will come into force on June 28, 2026.

Subject to any further amendments, the amended Order Imposing a Surtax on the Importation of Certain Steel Goods will be repealed on June 27, 2027, the second anniversary of the day on which the original Order came into force.

Further to the Order Amending the Import Control List (2026-3), item 82 of the Import Control List will be repealed on June 27, 2027, the first anniversary of the day on which the Order Amending the Import Control List (2026-3) 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 may be made when warranted, including potential changes to the administration of the measure.

The Canada Border Services Agency (CBSA) is responsible for administering Customs Tariff legislation and regulations, whereas 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 per cent surtax.

The CBSA and GAC will revise their public notices to inform importers of the change resulting from these amendments.

Contact

Alan Ho
International Trade Policy Division
Department of Finance
Ottawa, Ontario
K1A 0G5
Email: remissions-trq-derivatives-remises-ct-produitsderives@fin.gc.ca