In this Canada – Trump Administration 2.0 Update, Alex Steinhouse of the Fasken Government Relations and Political Law team discusses the increase to steel and aluminum tariffs and its impacts on Canada-US relations, as well as Canada's new border security legislation and the appointment of Parliamentary Secretaries.
50% Steel and Aluminum Tariffs
Effective Wednesday, June 4, President Donald Trump increased the tariff rate from 25% to 50% on steel and aluminum imports into the United States. This was done under the guise of protecting "America's steel and aluminum industries, which have been harmed by unfair trade practices and global excess capacity." President Trump has invoked his authority under Section 232 of the Trade Expansion Act of 1962 (national security grounds) in order to adjust these tariffs.
The President's proclamation stated that "the increased tariffs will more effectively counter foreign countries that continue to offload low-priced, excess steel and aluminum in the United States market." This followed the President's sudden announcement of this new measure last Friday during a rally in Pittsburgh, Pennsylvania.
The one exception to the new tariff rate is United Kingdom steel and aluminum imports, which will remain at 25% with possible changes or quotas starting July 9, 2025, depending on the status of the US-UK Economic Prosperity Deal.
Of note, the United States' Aluminum Association President & CEO, Charles Johnson, issued a critical statement with respect to the increased tariff rate, which reads in part:
"Re-establishing a more level playing field for domestic producers is critical but a Section 232 tariff of 50% threatens to undermine the very industry the administration aims to support. The Aluminum Association, which represents the full industry supply chain and 70% of domestic production, urges the administration to reconsider today's decision given the negative impact it will have on manufacturers.
Aluminum and steel are fundamentally different metals with distinct supply chains, market dynamics and strategic challenges. A one-size-fits-all approach to trade policy for these strategic materials risks unintended consequences for the U.S. economy and our national defense. Critically, a 50% tariff rate could also raise prices for consumers, decrease demand and undermine the aluminum industry's ability to serve the U.S. defense industrial base. Aluminum firms need a reliable supply of metal, protection from transshipped metal from non-market economies, and certainty in the tariff landscape" (emphasis added).
Canadian Reaction to Increased Steel and Aluminum Tariffs
In a statement to CTV News Tuesday night, the Prime Minister's Office called the new tariff rate "unlawful and unjustified," and said that the federal government "is engaged in intensive and live negotiations to have these and other tariffs removed as part of a new economic and security partnership with the United States." It went on to say: "We are fighting to get the best deal for Canada, and we will take the time necessary, but no longer."
The PMO added that every dollar collected from Canada's retaliatory tariffs on over $90 billion, before remissions, will go to "supporting Canadian workers and businesses impacted by the harmful US tariffs."
Speaking to reporters on Wednesday, Prime Minister Carney confirmed that there will be no immediate new Canadian retaliation to these tariffs. The government had previously lifted in April many of the retaliatory tariffs imposed in March in order to avoid driving up prices for Canadian consumers. As such, Oxford Economics estimates this week that more than half of US steel imported into Canada is currently exempt from tariffs.[1]
Meanwhile, Industry Minister Mélanie Joly said the government is considering different response scenarios and vowed it will make a decision before too long.
Canadian government sources suggest negotiations with the Americans on a new security and trade relationship are underway, but they do not expect a deal to be signed in advance of the G7 summit in Kananaskis, Alberta from July 15-17.[2]
On that note, US Ambassador to Canada, Pete Hoekstra, told The Globe and Mail Thursday that "Carney-Trump talks" are "being held under a cone of silence to ensure a positive outcome," and that a deal could be reached by September.[3] These talks include recent meetings between Trade Minister Dominic LeBlanc and US Commerce Secretary Howard Lutnick and Trade Representative Jamieson Greer.
Mr. Hoekstra said the Canadians and Americans are "laying out the perimeters of a deal that could involve boosting U.S. content in autos, improving US access to Canadian critical minerals and ensuring Canada plays a much bigger role in the Arctic. The talks also include increased defence spending, energy, border security, fentanyl as well as steel and aluminum."Of note, these talks do not include Mexico.
As has previously been discussed in these updates, Canada is the largest steel and aluminum supplier to the US, and the impacts on both workers and the industry will be tremendous.
For instance, according to the Canadian national director for the United Steelworkers union, Marty Warren, "we are on the verge of collapse in some places. We cannot access the American market at 50 per cent tariffs," he said, adding "that nearly 65 per cent of Canadian steel goes to the US market."
Representatives from the steel industry, including Catherine Cobden, President of the Canadian Steel Producers Association, said that the Prime Minister's decision to roll back the tariffs was "ill-advised" and stopped manufacturers from moving toward using Canadian steel. She demanded the immediate reinstatement of retaliatory tariffs on US steel imports and hike them to 50%.[4]
Canadian steel firms and workers attended Parliament Hill on Thursday to meet with MPs and Ministers to further advocacy efforts on pushing back at the tariff hike.[5]
Ontario Premier Doug Ford has also urged the federal government to immediately retaliate. He said "everything is on the table" with respect to another round of provincial retaliation measures. The Premier also vowed to meet with Canadian steel companies to attempt to onshore $30 billion of steel that is currently imported from the US.
Readers will recall that Mr. Ford had temporarily imposed a 25% surcharge on Ontario hydro exports to the US when the first round of 25% steel and aluminum tariffs occurred, before canceling the measure within a day of American threats to increase their tariff rate to 50% in response. However, this time around, the Premier did say that he understands, from his conversations with Prime Minister Carney, that "we are close to making a deal with the US," which is why he is not for now reinstating the electricity surcharge.
These threats to the Canadian economy unfold as Statistics Canada unveiled grim new economic data on Thursday. Canada posted its largest merchandise trade deficit on record in April at $7.1 billion. In the first full month facing American tariffs, Canadian exports fell sharply, with the American tariffs more than offsetting a gain in exports to other countries around the world. Notably, exports of motor vehicles and parts dropped 17.4%, while exports of consumer goods fell 15.4% and those forenergy products dropped 7.9%.[6]
Border Bill
In other Canada-US relations news, Public Safety Minister Gary Anandasangaree tabled Bill C-2, the Strong Borders Act, on Tuesday, June 3. Amongst its many proposed measures in its 140 pages, the Bill puts forward legislative updates, which had been previously promised by former Prime Minister Trudeau as part of the $1.3 billion border plan to American concerns over fentanyl and the state of the Canada-US border.
On that note, the Bill seeks to provide law enforcement with more tools to keep the borders secure, combat transnational organized crime, stop the flow of illegal fentanyl, and crack down on money laundering. It is intended to bolster the Canadian response to increasingly sophisticated criminal networks, and make a series of major changes to the Canadian immigration and asylum system. It will also enable the Canadian Coast Guard to conduct security patrols and collect, analyze and disseminate information and intelligence for security purposes. The Bill is already drawing scrutiny from national security experts, particularly with respect to the proposed reforms to the immigration and asylum processes.
New Parliamentary Secretaries
On Thursday, Prime Minister Carney announced his team of Parliamentary Secretaries. Parliamentary Secretaries play a mission critical liaison role between their respective Ministers and secretaries of State, and Parliament. This includes acting as their respective Minister's conduit at Parliamentary Committees, answering questions on behalf of the Minister or Secretary of State at Question Period and in parliamentary debates, and making policy and funding announcements on their behalf. As such, many on the list areset to take on roles in the larger Canada-US file.
We now wait to see the composition of the various Parliamentary Committees, and what impact that may bring on Canada-US relations. For more on this topic, please consult our Government Relations and Political Law Bulletin from this week, "Committees in a Minority Parliament: Instability, Opportunity and Reputational Risk."
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